~< 


^i  16 


<,^^IIBRARY^^ 


^•OF-CAUFO/?^ 


-^NN^lIBRARYQr^ 


'^<!/0JllV3-J0'^ 


ecOP'CAllFOff^ 


•^^'AHViienv^      ^<?AHvij8n-^^ 


UNIVER% 


<UP, 


-^^■UNIVER%. 

n 


v>:lOSANCElfx> 


'^/iil3AINn3WV 


vvlOSMCElFX/ 

s 


■^Aa3AlN(l•3\^^^ 


JAlNri-3\\^^- 


\ 


<^sMl!BRARYQr 


^<!/0JllVD-JO^ 
A,0FCAIIF0% 


^^JllOWSm^        "^/iTl^AlNTlWV^ 


NIVERi-ZA 


o 


^/^il3MNn]Wv 


'^<i/OJIlVJJO"^ 


^(i/ojnvDJo'^ 


<^" 


NIVER5-//. 


o 
iNVSOl^ 


o  ^ 


'^^/smwm: 


^OFCAIIFOP^ 


^^AilVa8Il# 


,^jOfCALIFO/?^> 


^^Aavdaii-#'' 


ITVJJO^ 


-^vM-lIBRARYQ^. 


33 


A'rtE-UNlVER 


.lOS-ANCflFj-^ 


^,OF-CA[IFO% 


yym.i^ 


^^■Auvaan-i^ 


.^WEUNIVER 


% 


•  1  I3JI1V    wM.i 


f) 


/^       >^-lOS-AUCElfJV. 


g)!! 


.VlOS-ANGEia. 


^tUBRARYQc        <5^HIBRARYQ^ 


<  SH 


so       2  =o 


^OFCAIIFOI?^      ^OFCALIFO/?^ 


THE  TRUTH  ABOUT 
THE  RAILROADS 


THE  TRUTH  ABOUT 
THE  RAILROADS 


BY 


HOWARD    ELLIOTT 


•^iT/v^ 


BOSTON  AND  NEW  YORK 

HOUGHTON  MIFFLIN  COMPANY 


COPYRIGHT,   1913,  BY  HOWARD  ELLIOTT 
ALL    RIGHTS   RESERVED 

Published  November  iqi^ 


E4-U 

PUBLISHERS'  NOTE 

The  several  chapters  of  this  book  were  first 
written  as  addresses  to  be  delivered  on  various 
occasions  and  in  various  places.  The  publish- 
ers asked  Mr.  Elliott's  permission  to  make  a 
book  out  of  them,  believing  that  such  a  vol- 
ume would  be  useful  in  the  consideration  of 
the  railroad  situation  in  the  United  States.  In 
the  preparation  of  the  addresses  for  publica- 
tion references  to  particular  times  and  places 
have  been  for  the  most  part  omitted,  but  in 
some  instances  these  have  been  retained  be- 
cause they  are  applicable  to  general  conditions 
existing  to-day  all  the  country  over. 

4  Park  Street,  Boston, 


This  book  about  Railroads  is  presented 
with  the  compliments  of  a  Lady  who  takes  a 
great  interest  in  the  subject,  in  the  hope  that 
it  may  be  found  interesting  and  instructive. 


CONTENTS 

Introduction ix 

I.  Cooperation  between  the  Railway- 
Owner,  THE  Railway  Employee, 
AND  THE  Railway-User      ...       3 

II.    The    Individual,    the    Corporation, 

AND  THE  Government         •       •       •     35 

III.  The  Conservation  of  Railway  Ser- 

vice     70 

IV.  Rate-Making  and  the  Government     92 

V.    The  Relation  between  the  Farmer 

and  the  Railroad        .       .       .       ♦   131 

VI.    Agriculture,  Banking,  and  the  Car- 
rier     164 

VII.    Transportation  in  New  England      .   191 

VIII.    Public  Opinion  :  Its  Effect  on  Busi- 
ness     231 


INTRODUCTION 

The  time  has  now  come  for  an  impartial  and 
serious  consideration  by  the  people  at  large,  as 
to  whether  it  might  not  be  better  for  their  in- 
terests individually  and  collectively,  and  for 
all  business  interests  of  the  country,  to  give 
the  railroads  a  breathing-spell,  to  eliminate 
some  of  the  useless  and  unnecessary  restric- 
tive law  under  which  they  are  compelled  to 
work,  and  to  permit  them  to  solve  the  very 
serious  problem  of  giving  the  public  what  it 
wants  in  railroad  service  and  railroad  facilities, 
by  encouraging  friendly  relations  and  friendly 
discussion  with  the  public,  rather  than  to  have 
constant  friction  and  bickering. 

For  many  years,  and  particularly  in  the  last 
few,  there  has  been  agitation  about  the  so- 
called  railroad  question,  or  problem.  Through 
lack  of  complete  information  about  the  rail- 
roads there  has  arisen  some  antagonism  to- 
ward them,  and  it  is  important  to  explain  the 

ix 


INTRODUCTION 

real  situation,  because  the  American  people, 
when  they  know  the  truth,  are  not  likely  to  be 
unjust  to  any  one  class  of  people,  or  to  any  one 
business. 

[Upon  the  one  hand  there  is  a  critical  public. 
Upon  the  other,  the  railroads  are  struggling 
with  forces  which  are  causing  rates  to  remain 
stationary  or  to  decline,  causing  wages  to  rise 
or  to  remain  stationary,  bringing  demands 
from  a  prosperous  and  luxurious  people  for 
increasingly  expensive  facilities  and  service, 
and  causing  taxation  to  rise  at  an  alarming  rate. 
These  four  forces  are  all  at  work  reducing  the 
margin  between  income  and  outgo  and  making 
it  more  and  more  difficult  for  the  owners  of 
railroad  properties  to  keep  their  lines  in  suit- 
able condition  to  carry  on  the  business  of  the 
country,  and  to  obtain  a  return  commensurate 
with  the  risk  of  the  business  and  sufficient  to 
attract  further  investment. 

If  rates  had  not  been  fair  and  service  ade- 
quate, neither  agriculture  nor  commerce  would 
have  shown  such  gratifying  gains  as  were  made 
during  the  census  period  ending  in  19 lo.  If  it 


INTRODUCTION 

were  not  a  fact  that  since  they  were  con- 
structed railroads  have  steadily  lowered  rates, 
while  increasing  the  extent  and  raising  the 
quality  of  their  service,  and  at  the  same  time 
steadily  increasing  expenditure  and  work  for 
the  development  of  the  country,  America  to- 
day would  not  be  what  it  is.  Its  development 
would  have  been  retarded  and  its  progress 
slow. 

To-day,  however,  the  railroads  are  a  big  tar- 
get at  which  many  shoot.  Out  of  92,000,000 
people  relatively  few  in  the  regular  course  of 
their  lives  and  business  come  closely  enough 
into  contact  with  railroads  to  know  railroad 
officers  or  understand  the  business.  Those 
who  do  not  must  depend  upon  casual  informa- 
tion—  what  politicians  say,  what  magazines 
print,  what  appears  in  the  daily  press  —  for 
their  knowledge  about  railroads.  The  argu- 
ments hurled  at  railroads  by  some  of  the  mag- 
azines are  often  more  calculated  to  increase 
circulation  than  to  educate  the  American 
people  as  to  the  actual  facts.  Many  of  the 
charges  which  have  been  believed  by  thou- 

xi 


INTRODUCTION 

sands  of  people  are  not  based  on  accurate 
knowledge. 

Railroad  officers  have  been  less  active  than 
they  should  have  been  in  keeping  in  touch 
with  the  public.  The  railroad  stockholders 
have  not  realized  how  strong  the  forces  affect- 
ing their  properties  are.  This  condition  has 
changed  and  the  modern  railroad-owners, 
officers,  and  employees  should  and  do  realize 
that  it  is  necessary  to  maintain  cordial  and 
friendly  relations  with  the  public  and  by  their 
personal  efforts  and  examples  to  give  full 
information  about  the  business,  and  to  build 
up  a  constantly  better  feeling  toward  the 
transportation  machine  of  the  United  States. 

It  is,  no  doubt,  true  that  little  things — the 
abruptness  of  an  agent  or  a  trainman,  a  lack  of 
proper  courtesy,  inattention  to  complaints  of 
the  public,  dilatoriness  —  often  cause  quite  as 
much  criticism  from  the  public  as  things  of 
greater  importance.  This  irritation  and  criti- 
cism can  be  reduced  by  adjusting  the  relations 
between  the  railroads  and  the  public  at  the 
point  of  contact.  For  example,  the  passenger 

xii 


INTRODUCTION 

men  and  their  representatives  during  191 3 
came  into  touch  with  each  one  of  nearly  nine 
hundred  million  users  of  railroads.  In  each  of 
nine  hundred  million  instances  some  man  had 
a  chance  to  make  or  mar  the  reputation  of  his 
line  and  to  affect  just  a  little  the  attitude  of 
the  people  toward  the  transportation  business. 
Nine  hundred  million  instances  of  courtesy 
and  attention,  or  nine  hundred  million  pas- 
sengers completing  a  journey  with  a  feeling  that 
the  railroad  was  interested  in  their  comfort  or 
pleasure,  would  constitute  a  great  leverage, 
moving  public  sentiment  into  better  channels. 
Not  only  the  passenger  man  but  railroad 
men  in  general  can  build  up  cordial  relations  in 
this  way,  and  have  an  opportunity  to  place 
before  the  people  the  real  facts  about  the  rail- 
road business  of  this  country,  which  will  show 
a  majority  of  the  American  people  —  who 
are  unfair  only  because  they  do  not  fully  un- 
derstand this  question  —  that  the  railroads 
cannot  indefinitely  provide  at  rising  costs  the 
increasingly  good  service  which  the  public 
demands  and  should  have,  and  survive,  unless 
xiii 


INTRODUCTION 

there  is  more  reason  in  directing  and  control- 
ing  the  four  forces  which  are  influencing  rates, 
wages,  demands,  and  taxes. 

There  is  plenty  of  information  at  hand 
about  the  railroad  business.  No  form  of  busi- 
ness in  the  United  States  is  conducted  so 
openly,  and  in  none  are  the  facts  and  figures  so 
available.  This  information  does  not  reach  the 
everyday  citizen,  who  is  interested  but  lacks 
ready  sources  of  information,  to  the  degree 
that  it  should.  Every  railroad  man  can  do  a 
great  work  by  seeing  that  it  does  reach  him. 

The  press  of  the  United  States  reaches  the 
people.  The  press  can  help  the  relations  be- 
tween the  public  and  the  railroads  by  giving 
correct  information,  and,  if  approached  prop- 
erly, will  usually  manifest  a  fair  attitude. 
Railroad  men  have  a  responsibility  in  this 
respect,  and,  with  their  more  intimate  knowl- 
edge of  the  business,  they  can  in  many  ways 
help  the  newspapers  to  avoid  misstatements 
and  false  conclusions.  In  fact,  this  is  a  legiti- 
mate and  patriotic  line  of  work  for  the  railroad 
stockholder,  officer,  and  employee, 
xiv 


INTRODUCTION 

The  railroad  is  working  hard  to  do  its  part, 
but  it  cannot  accomplish  the  impossible,  and  it 
needs  the  careful  thought,  judgment,  and  help 
of  men  in  business  life,  who  need  to  have  the 
railroads  grow  and  improve.  The  railroad 
system  of  the  United  States  is  a  great  piece 
of  commercial  machinery,  essential  to  every 
one  in  this  complicated  modern  civilization; 
without  this  piece  of  machinery,  there  could 
not  be  the  volume  of  business  —  agricultural, 
manufacturing,  and  commercial  —  that  there 
now  is.  The  magnitude  of  these  transactions  is 
so  great  that  this  piece  of  commercial  machin- 
ery must  be  kept  in  the  very  best  order,  and  its 
capacity  must  be  increased  all  the  time.  With- 
out this,  much  business  could  not  exist;  on  the 
other  hand,  without  the  business,  this  piece  of 
commercial  machinery  would  be  idle  and  rust. 
The  relation  between  the  two  is  very  close. 
Injustice  and  unfair  treatment  of  either  by  the 
other  is  sure  to  react,  and  this  fact  is  a  much 
safer  insurance  against  any  injustice  on  the 
part  of  railroads  than  attempting  to  manage 
by  legislation  all  of  their  affairs  in  great  detail. 

XV 


INTRODUCTION 

To-day  on  all  important  questions  but  one 
the  railroad-owner  is  directed  by  acts  of  Con- 
gress and  of  state  legislatures  and  by  the  or- 
ders of  commissions  and  bureaus.  He  has  little 
control  over  the  rates,  over  the  hours  of  labor, 
over  the  rules  for  the  conduct  of  the  business 
in  which  his  money  is  invested,  over  the  taxes 
he  shall  pay.  There  is  reserved  to  him  the  one 
duty  and  responsibility  of  finding  money  to 
pay  the  bills.  In  order  to  make  clear  what  this 
interference  with  the  details  of  management 
really  means,  a  commonplace  illustration  may 
be  used. 

Suppose,  for  example,  that  some  men  are 
engaged  in  the  business  of  hauling  freight  of 
all  kinds  from  the  water-front  to  the  various 
parts  of  a  city.  The  owners  and  chief  manag- 
ers are  doing  the  best  they  can  to  deliver  coal, 
merchandise,  and  other  freight  promptly  and 
cheaply,  though  every  pound  must  be  hauled 
with  difficulty  over  slippery  streets  and  up 
heavy  grades.  Suddenly,  however,  a  large 
number  of  men  appear  and  begin  to  tell  the 
owners  and  managers  how  to  run  their  busi- 
xvi 


INTRODUCTION 

ness.  None  of  these  men  have  any  financial 
interest  in  the  business  of  transporting  mer- 
chandise by  wagon,  and  few  of  them  have  any 
practical  knowledge  of  it.  One  man  says,  "I 
have  been  looking  at  your  wagons  and  their 
beds  are  not  the  right  height  from  the  ground, 
and  you  must  change  them.  I  notice  also  that 
the  steps  are  put  on  wrong  and  the  buckles  of 
your  harnesses  are  not  of  the  right  character. 
You  must  fix  these  things. '^  Another  man 
says,  "The  lanterns  your  teamsters  carry  are 
not  suitable.  You  must  buy  a  much  more 
expensive  kind  and  see  that  they  are  carried 
whether  they  are  needed  or  not."  Another 
says,  "You  must  not  use  a  certain  lead  horse 
any  more  because  he  is  not  suited  to  the  busi- 
ness." Another  says,  "  I  noticed  that  you  were 
carrying  a  calf  on  one  of  your  wagons.  In  such 
cases  you  must  get  your  wagon  from  the  water- 
front to  destination  within  one  hour,  and  it 
must  be  moved  at  a  speed  of  not  less  than  ten 
miles  per  hour."  Another  says,  "In  our  part 
of  the  city  your  wagons  must  not  move  faster 
than  four  miles  an  hour,  and  you  must  stop 
xvii 


INTRODUCTION 

them  at  every  street-crossing."  Another  says, 
"The  city  authorities  have  decided  that  you 
must  reduce  all  your  charges  25  per  cent." 
And  still  another  says,  "I  represent  a  com- 
mittee that  has  decided  that  your  sheds  and 
barns  are  not  of  the  right  type  and  you  must 
tear  them  down  and  build  new  ones."  Mean- 
while some  of  the  stablemen  and  others  have 
come  to  the  managers  and  owners  saying  that 
they  have  decided  not  to  do  any  more  work 
unless  their  pay  is  increased  25  per  cent. 
Naturally  the  owners  and  their  managers  are 
somewhat  confused  and  discouraged  at  all  this 
interference  and  are  tempted  to  say,  as  the 
fiddler  did  in  the  mining  camp,  "Please  do  not 
shoot,  for  I  am  doing  the  best  I  can." 
UVow  this  all  sounds  rather  ridiculous  when 
it  is  applied  to  the  man  hauling  coal  and  mer- 
chandise In  the  city,  but  it  Is  exactly  what  is 
going  on  all  the  time  In  the  United  States  to- 
day in  relation  to  the  railroads;  only  there  is 
much  more  of  it,  because  the  Federal  Govern- 
ment and  all  of  the  States  are  making  rules 
and.  regulations  about  the  kind  of  equipment 
xviii 


INTRODUCTION 

to  be  used,  the  character  of  locomotive  head- 
light, the  kind  of  boiler  in  the  engine,  the  speed 
of  live-stock  trains,  the  speed  of  trains  in  cities, 
the  rates  to  be  charged,  the  kind  of  buildings 
to  be  put  up,  and  the  labor  unions  are  at  the 
same  time  making  demands  for  increases  in 

Lincoln  said  the  country  could  not  endure 
"half  slave  and  half  free,"  and  it  is  a  grave 
question  whether  the  railroads  can  continue  to 
meet  the  demands  of  the  people  and  be  the 
efficient  instruments  that  they  should  be,  if 
owned  by  private  individuals,  but  in  all 
important  matters  of  management,  except 
finance,  practically  directed  by  governmental 
authority. 

The  American  people  are  strong  enough  to 
have  any  kind  of  railroad  ownership  and  man- 
agement that  they  want,  and  if  they  want 
government  ownership  they  can  have  it.  I 
submit,  however,  that  the  management  of 
business  enterprises  in  this  country  by  the 
Government  has  not  given  evidence  of  thor- 
oughness, efficiency,  and  economy  equal  to 

xix 


INTRODUCTION 

that  displayed  by  private  individuals,  and 
that  it  is  not  to  the  best  interest  of  this  country 
to  have  government-owned  and  government- 
managed  railroads. 

So  I  repeat,  those  in  the  railroad  business, 
both  owners  and  employees,  have  a  greater 
responsibility  than  ever  before;  not  only  the 
responsibility  of  doing  their  best,  whatever 
may  be  their  position  in  the  service,  but  the 
responsibility  of  telling  the  people  the  real 
facts  —  the  truth  —  about  the  railroad  busi- 
ness, the  responsibility  of  using  their  opportu- 
nities to  aid  the  nation  by  helping  the  move- 
ment to  have  a  greater  proportion  of  our  pop- 
ulation live  in  the  country  than  in  the  cities, 
the  responsibility  of  directing  the  attention  of 
the  tourist  to  the  beauties  of  America,  so  that 
the  money  now  going  to  foreign  lands  will 
remain  here  and  help  to  increase  the  balance 
of  trade  in  our  favor,  and  last,  but  not  least, 
the  responsibility,  which  to-day  is  a  great  one 
to  every  American  and  to  every  railroad 
employee,  of  encouraging  the  practice  of  those 
habits  of  industry,  tshoroughness,  and  thrift, 

XX 


INTRODUCTION 

which  have  not  been  so  common  in  the  last 
twenty-five  years  as  they  were  when  our  coun- 
try began  its  work  of  becoming  a  great  nation. 

The  average  American  citizen  has  good 
common  sense.  He  lives  in  the  best  country  in 
the  world,  has  the  best  institutions,  by  far  the 
best  and  cheapest  rail  transportation  in  the 
world,  and  if  the  individual  will  exercise  his 
common  sense  there  is  no  limit  to  the  progress 
that  this  great  nation  will  make.  If  he  does 
not,  there  will  be  increasing  danger  of  a  change 
in  our  institutions,  so  that  the  railroads  and 
corporations,  which  are  and  should  be  power- 
ful instruments  for  good,  will  be  crippled,  and 
later  on  the  foundations  of  the  Government 
itself  will  be  shaken. 

Every  patriotic  individual  should  do  his 
part  to  counteract  the  foolish  talk  and  insidi- 
ous Influences  that  are  at  work  in  the  land  and 
should  exercise  his  mental  and  moral  strength. 

"  Say  not  the  days  are  evil —  who's  to  blame? 
And  fold  the  hands  and  acquiesce  —  O  shame; 
Stand    up,  speak  out — and   bravely  —  in  God's 
name." 

xxi 


INTRODUCTION 

It  is  in  this  cooperative  and  hopeful  spirit, 
then,  that  the  following  addresses  on  the  rail- 
road business  in  America  are  now  submitted 
with  the  hope  that  they  will  throw  some  light 
on  a  subject  most  important  to  the  future 
welfare  of  the  United  States. 


THE  TRUTH  ABOUT 
THE  RAILROADS 


THE  TRUTH  ABOUT 

THE  RAILROADS 

I 

-2.5  /^^ 

COOPERATION  BETWEEN  THE  RAILWAY- OWNER, 
THE  RAILWAY  EMPLOYEE,  AND  THE  RAILWAY- 
USER » 

Cooperation  is  defined  as  "the  association 
of  a  number  of  persons  for  their  common  bene- 
fit," and  my  purpose  is  to  show  the  absolute 
necessity,  if  prosperity  and  progress  are  to 
continue,  of  cooperation  between  the  railway- 
owner,  the  railway  employee,  and  the  railway- 
user. 

In  order  to  consider  this  question,  a  brief 
statement  must  be  made  showing  what  the 
railway  system  of  the  United  States  is  to-day, 
what  it  represents,  the  work  it  does,  and  the 
work  it  must  prepare  to  do  if  safe  and  ade- 

*  Address  delivered  at  the  Montana  State  Fair,  Helena, 
Mont.,  September  26,  1910. 

3 


THE  TRUTH  ABOUT  THE  RAILROADS 

quate  transportation  is  to  be  furnished  to  the 
people  of  the  United  States.  The  railways  of 
the  country,  in  their  present  form,  have  been 
built  since  the  close  of  the  Civil  War,  or  in 
less  than  fifty  years,  and  are  the  wonder  and 
admiration  of  students  of  the  transportation 
problem  who  come  here  from  other  countries. 
/  There  are  234,182  miles  of  railway,  and  more 
than  340,000  miles  of  track  in  this  country, 
as  compared  with  a  trifle  less  than  300,000 
miles  of  railway  in  all  the  other  countries  of 
the  world  combined.  There  are  nearly  58,000 
locomotives;  more  than  45,000  passenger-train 
cars;  nearly  2,200,000 freight-  and  service-cars. 
On  these  tracks,  and  with  these  engines  and 
cars  were  run  in  the  year  ending  June  30, 1909, 
freight-trains  for  560,602,557  miles,  and  passen- 
ger-trains for  491,903,107  miles,  or  an  average 
of  2,883,577  niiles  everyday  in  the  year.  This 
is  equal  to  a  trip  around  the  world  at  the 
equator  116  times  each  twenty-four  hours. 

These  trains  handled  in  the  year  ending 
June  30,  1909,  217,756,776,000  tons  of  freight 
one  mile  and  29,452,000,000  passengers  one 

4 


OWNER,   EMPLOYEE  AND   USER 

mile.  The  significance  of  these  figures  will  be 
better  understood  by  stating  that  they  are  the 
equivalent  of  hauling  a  ton  of  freight  2419 
miles  for  every  man,  woman,  and  child  in  the 
United  States,  and  giving  each  of  them  a  ride 
on  a  passenger-train  of  327  miles.  The  number 
of  tons  of  freight  moved  over  each  mile  of  rail- 
way during  a  year  is  the  measure  of  the  freight 
work  performed  for  the  country  by  the  rail- 
ways.  This  was  — 

In  the  United  States 969,000  tons  one  mile  in  1909 

In  England 530,000  tons  one  mile  in  1908 

In  Germany 880,000  tons  one  mile  in  1908 

In  France 497,000  tons  one  mile  in  1907 

—  showing  that  the  American  railways  are 
furnishing  a  greater  service  per  mile  of  railway 
than  the  older  countries. 

Since  1889  the  miles  of  railway  in  the  United 
States  have  increased  52.7  per  cent;  the  pas- 
sengers carried  one  mile  on  those  railways 
have  increased  154.8  per  cent,  and  the  tons  of 
freight  carried  one  mile  224.3  per  cent;  the 
number  of  employees  116.2  per  cent,  and  the 
taxes  230.8  per  cent. 

With  ninety  million  busy  people  In  this 
5 


THE  TRUTH  ABOUT  THE  RAILROADS 

country  the  next  twenty  years  must  see  a 
constant  addition  to  the  railway  faciUties  of 
the  country  if  the  commerce  is  to  be  moved 
satisfactorily,  and  the  railway-user  must  see 
to  it  that  the  railway-owner  has  sufficient 
margin  to  justify  the  enormous  additional 
investment  that  must  be  made  in  order  to 
provide  the  needed  transportatioiJJ 

pThe  passenger-trains  of  the  United  States 
earned  on  the  average  for  the  year  ending 
June  30,  1908,  ^1.27  per  train-mile,  and  the 
average  cost  per  train-mile  for  expenses,  not 
allowing  anything  for  taxes,  using  the  total 
freight- and  passenger-train-miles,  was  ^1.47. 
From  this  it  is  plain  that  there  is  no  margin  in 
the  passenger  business  for  taxes,  interest,  and 
dividends,  and  that  passenger-train  service, 
as  a  whole,  is  furnished  without  profit,  and 
often  to  the  detriment  of  the  freight  business, 
which  must  be  moved  promptly  for  the  devel- 
opment of  the  country;T/ 

This  country,  as  it  grows  in  population  and 
wealth,  wants  more  and  better  passenger-train 
service  and  better  stations,  just  as  it  wants 

6 


OWNER,   EMPLOYEE  AND  USER 

more  and  better  hotels  and  more  and  better 
street-paving  and  lighting  and  more  and  better 
restaurants;  but  in  the  case  of  the  hotels, 
paving,  lighting,  restaurants,  and  many  other 
things,  the  public  are  willing  to  pay  more,  and 
do  pay  more,  for  the  better  facilities.  Not  so 
with  the  railways;  with  more  trains,  heavier 
trains,  faster  trains,  more  luxurious  trains, 
and  better  track,  there  has  swept  over  the 
country  a  wave  of  legislation  for  a  2-cent  fare. 
/Xhe  2-cent  maximum  fare  is  unjust,  and 
retards  the  development  of  the  very  things  the 
railway-user  wants,  because  it  is  obvious  the 
railway-owner  must  sooner  or  later  stop  doing 
so  much  work  without  any  margin  of  profit 
at  all) 

In  England  the  first-class  passenger  rate 
is  4  cents,  second-class  2I  cents,  and  third- 
class  2  cents.  In  Germany,  the  first-class  is  3 
cents,  second-class  2.55  cents,  third-class  1.79 
cents;  but  the  second-  and  third-class  accom- 
modations in  England  and  Germany  are  no- 
where near  as  good  as  those  furnished  the 
traveler  in  the  United  States. 

7 


THE  TRUTH   ABOUT  THE   RAILROADS 

In  Great  Britain  the  average  freight  charge 
for  handling  a  ton  of  freight  one  hundred  miles 
was  ^2.31  in  1907  and  $2.33  in  1908.  In  Ger- 
many the  average  charge  was  ^1.42  In  1908; 
in  France,  ^1.46;  Austria,  ^1.39;  Belgium, 
$1.22.  The  great  freight  service  of  the  Ameri- 
can railways  was  furnished  in  1908  and  in  1909 
at  an  average  charge  of  75  cents  for  handling 
a  ton  one  hundred  miles. 

In  1888  the  average  rate  per  passenger- 
mile  in  the  United  States  was  2,35  cents,  and 
In  1908  only  1.937  cents,  and  yet  the  accom- 
modations provided  have  constantly  improved 
In  quality.  In  1870,  the  average  rate  for  hand- 
ling a  ton  of  freight  100  miles  was  ^1.99,  and 
in  1909,  75.4  cents,  or  a  reduction  In  forty  years 
of  62  per  cent. 
\  The  railway-owner,  by  his  courage,  energy, 
and  intelligence  In  adopting  advanced  methods, 
has  been  able  to  improve  the  railway  system  of 
the  United  States  steadily  in  the  last  forty 
years  and  still  maintain  and  operate  his  prop- 
erty In  spite  of  this  reduction  in  rates.  If  the 
railway-user  had  paid,  for  the  year  which  has 


OWNER,  EMPLOYEE  AND   USER 

just  passed,  the  same  average  freight  rates  as 
in  1870,  he  would  have  paid  $2,691,473,751.36 
more  than  he  did  pay;  if  he  had  paid  the  same 
average  rates  per  passenger-mile  as  in  1888, 
the  additional  payment  would  have  been 
$147,260,000,  the  two  amounts  being  greater 
than  the  entire  earnings  of  all  the  United 
States  railways  in  the  last  yeaf^ 

But  the  railway-owner  is  now  put  to  it  to 
maintain  and  operate  his  property  on  the  basis 
of  present  rates,  present  wages,  present  prices 
for  material,  present  taxes,  present  rigid  gov- 
ernment restrictions,  and  the  growing  demand 
of  a  prosperous  people  for  more  and  better 
service. 

Railways  are  using  rails  of  90  and  100 
pounds  weight  to  the  yard;  freight-cars  carry- 
ing 50  and  60  tons  of  freight;  passenger-cars 
weighing  50  and  70  tons  often  carrying  only  a 
dozen  people,  or  five  tons  of  dead  weight  for 
one  passenger,  and  locomotives  weighing  300,- 
000  to  600,000  pounds,  with  58,000  pounds  on 
a  single  axle.  The  railway-owner  can  go  no 
further  in  using  larger  tools  in  his  plant  and 

9 


,  THE  TRUTH  ABOUT  THE  RAILROADS 

must  depend  for  any  further  economies  upon 
an  improvement  in  the  work  of  the  railway- 
user  and  the  employee  in  using  that  plant.  If 
the  railway-user  fails  to  load  and  unload  the 
cars  promptly,  if  the  railway  employee  is 
careless  and  inefficient,  the  railway  cannot  be 
used  to  its  full  effect. 

The  American  railways  to-day  are  repre- 
sented by  a  capitalization  of  ^13,600,000,000, 
or  a  trifle  less  than  ^58,000  per  mile  of  road, 
and  less  than  ^40,000  per  mile  of  track.  Com- 
pare this  total  capitalization  with  the  total 
reported  for  farm  values,  ^20,514,001,838  for 
1900,  and  in  manufacturing,  $12,686,265,673 
for  1905,  and  it  will  be  seen  that  the  railway 
is  the  second  great  industrial  interest  in  this 
country.  The  railways  in  Europe  are  capital- 
ized per  mile  as  follows :  — 

United  Kingdom ^275,040 

France I39.390 

Germany 109,788 

Austria 112,879 

Russia 80,985 

Belgium 169,806 

iHere  is  evidence  that  the  American  railway- 
owner  has  produced  a  piece  of  machinery  with 

10 


OWNER,   EMPLOYEE  AND  USER 

far  less  average  capitalization  than  in  any- 
other  country;  which  does  more  work  in  mov- 
ing the  commerce  of  the  country  per  mile  of 
railway  than  in  any  other  countr}^,  and  which 
has  steadily  reduced  the  prices  charged  to  the 
railway-user  in  spite  of  increasing  costs  and 
complications  in  doing  the  business.  :  The 
American  railway-system  of  to-day  could  not 
be  reproduced  for  a  figure  anywhere  near  what 
it  stands  for  on  the  books.  Monthly,  daily, 
almost  hourly,  improvements  have  been  made, 
and  the  railways  are  becoming  seasoned  and 
better  adapted  to  the  great  work  they  have  to 
perform.  Go  to  any  of  the  large  cities  and 
growing  towns  and  try  to  acquire  sufficient 
terminal  ground  to  do  even  a  moderate  busi- 
ness. Not  long  ago  in  New  York,  an  investiga- 
tion was  made  with  the  idea  of  seeing  what  it 
would  cost  to  get  an  entrance  to  the  city  and 
a  moderate  terminal  area,  from  the  northern 
boundary  down  to  about  Fortieth  Street.  One 
of  the  best  real-estate  agents  in  New  York 
made  a  calculation,  and  he  thought  that  a 
right  of  way  down  through  Manhattan  Island 

II 


THE  TRUTH  ABOUT  THE  RAILROADS 

sufficient  for  two  tracks  and  with  a  limited 
terminal  at  the  end  might  be  obtained  for 
^170,000,000,  but  would  probably  cost  $200,- 
000,000.  This  would  be  an  investment  of 
$170,000  or  $200,000  a  mile  for  the  New  York 
terminal  alone  of  a  railroad  between  Chicago 
and  New  York,  and  in  addition  right  of  way 
between  the  two  cities,  intermediate  terminals, 
and  the  railway  itself  must  be  obtained.  Every 
man,  of  his  own  knowledge,  is  aware  of  the 
fact  that  property  suitable  for  terminals,  in 
common  with  other  real  estate,  has  advanced 
very  much  in  value  in  all  cities,  big  and  little, 
in  the  United  States  in  the  last  twenty-five 
years.  The  railway-owner  is  paying  taxes  on 
those  increased  values  and  is  surely  as  much 
entitled  to  a  return  on  the  increased  value  as 
is  the  owner  of  a  farm,  or  the  owner  of  a  busi- 
ness block. 

Now,  who  is  the  owner  of  this  enormous 
and  complicated  piece  of  machinery  built  up 
in  the  last  fifty  years  .^  The  best  figures  ob- 
tainable as  to  the  number  of  stockholders  show 
440,000,  and  while  the  number  of  bondholders 

12 


OWNER,   EMPLOYEE  AND  USER 

cannot  be  determined  with  the  same  accuracy, 
information  about  a  few  roads  indicates  that 
the  number  of  bondholders  exceeds  the  number 
of  stockholders,  and  that  1,000,000  is  not  an 
unfair  figure  to  represent  those  holding  railway 
securities.  IVIany  of  these  holders  are  women 
and  children,  charitable  and  educational  insti- 
tutions, national  banks,  savings  banks,  trust 
companies,  and  insurance  companies.  The 
average  for  each  owner  of  railway  property  in 
this  country  is  ^13,600.  Of  course,  some  indi- 
viduals hold  more  than  this,  and  very  many 
hold  much  less,  but  the  statement  that  rail- 
ways are  owned  and  controlled  by  a  few  very 
rich  men  is  not  correct.  These  1,000,000 
owners  represent  at  least  4,000,000  people  in 
the  United  States  whose  daily  bread  and  butter 
depends  more  or  less  on  the  success  or  failure 
of  the  railways. 

Now,  this  railway-owner,  with  an  average 
ownership  of  ^13,600,  is  dependent  entirely,  as 
to  a  return  on  his  investment  and  as  to  the 
safety  of  his  principal,  on  the  honesty,  intelli- 
gence, and  efficiency  of  the  railway  employee, 

13 


THE  TRUTH  ABOUT  THE  RAILROADS 

and  on  the  sense  of  justice  and  fair  treatment 
of  the  railway-user.  The  railway-owner  if  he 
does  not  like  his  investment,  cannot  shut  up 
shop  and  wait  a  while  until  business  is  better. 
He  cannot  even  abandon  his  business  and 
pocket  his  loss.  He  must  go  on,  whatever  the 
conditions  may  be,  with  the  hope  that  the 
ultimate  good  sense  and  justice  of  the  Ameri- 
can people  will  give  him  even  a  part  of  that 
protection  and  encouragement  that  is  given 
to  those  who  may  be  engaged  in  agriculture 
and  in  manufacturing. 

Then,  in  1909  there  were  8,831,863  deposi- 
tors in  savings  banks,  having  ^3,713,405,710 
on  deposit.  In  1908  there  w^ere  25,852,405 
separate  life-insurance  policies  held  in  this 
country  with  a  face  value  of  ^14,518,952,277. 
Every  savings-bank  depositor  and  every 
holder  of  a  life-insurance  policy  is  interested 
in  having  railway  securities  safe  and  profit- 
able, because  the  savings  banks  and  the  life- 
insurance  companies  are  all  holders  of  railway 
securities,  and  anything  that  affects  the  wel- 
fare of  those  two  great  institutions  affects 

H 


OWNER,   EiMPLOYEE  AND  USER 

millions  of  people  outside  of  the  owners  of 
railway  stocks  and  bonds.  In  1909  there  was 
^33,117,068,129  of  fire  insurance  written  in 
the  United  States  and  ^126,171,492  fire  losses 
paid.  The  large  fire-insurance  companies,  like 
the  large  life-insurance  companies,  are  inves- 
tors in  railway  bonds  and  stocks.  The  savings 
banks  and  insurance  companies  must  have 
assets  that  pay  a  sure  return  and  that  can  be 
converted  easily  and  quickly  into  cash,  and 
their  ability  to  pay  depends  in  part  upon  the 
stability  and  earning  power  of  the  great  rail- 
way corporations. 

For  the  years  1906,  1907,  and  1908,  com- 
plete statistics  are  furnished  by  the  Commerce 
Commission.  These  were  three  years  of  fairly 
good  business  in  the  country,  when  farmers  and 
manufacturers  did  well.  In  round  numbers, 
the  results  to  the  railways  of  the  country  from 
the  transportation  of  persons  and  property 
were :  — 

1906  igo7  1908 

Total  earnings  $2,325,765,167  $2,589,105,578  $2,394,780,410 
Total  expenses 

and  taxes        1,611,662,886  1,828,828,189  1,754,951,949 

Net  earnings      $714,102,281  $760,277,389  $639,828,461 

IS 


THE  TRUTH  ABOUT  THE  RAILROADS 

These  are  very  large  sums,  but  the  net 
earnings,  on  an  average  valuation  of  ^13,000,- 
000,000,  represent  only  5.49  per  cent  for  1906, 
5.85  per  cent  for  1907,  4.92  per  cent  for  1908, 
—  not  a  very  large  return  even  if  the  railway- 
owner  could  take  it  all,  but  he  must,  of  neces- 
sity, use  a  liberal  share  of  any  such  net  earn- 
ings for  a  multitude  of  improvements  and  ad- 
ditions to  the  railways,  for  as  the  Commerce 
Commission  says  in  its  report  for  1908, 
**  Every  safely  administered  railroad  should 
recognize  the  difficulty  of  bringing  operating 
expenses  under  control,  and  in  times  of  pros- 
perity provide  against  the  contingency  of 
reduced  traffic." 

The  railway-owner  recognizes  this,  for  there 
was  paid  in  interest  and  dividends,  in  the  years 
named,  1906  —  ^518,893,000,  or  3.99  per  cent; 
1907  —  ^551,129,000,  or  4.24  per  cent;  1908  — 
^571,114,000,  or  4.39  per  cent;  the  balance 
going  back  into  the  property.  In  fact,  in  order 
to  keep  up  a  great  piece  of  machinery  like  the 
railway,  subject  to  damage  in  many  ways  and 
needing  constant  additions,   an   amount  at 

16 


OWNER,  EMPLOYEE  AND  USER 

least  equal  to  60  per  cent  of  that  paid  in  divi- 
dends should  be  put  back  out  of  current  earn- 
ings into  the  property  each  year.  How  many 
farmers,  merchants,  and  miners  would  think 
these  returns  attractive  enough  to  justify  their 
engaging  in  the  business  ? 

Out  of  every  one  hundred  dollars  of  gross 
earnings  of  the  railways  in  1908  there  was  paid 
for  — 

Labor  —  direct  payment ^43-36 

■Labor  in  materials  purchased 7.77 

Labor  in  fuel  and  oil 6.88 

Total  for  labor $58.01 

Fuel  and  oil,  less  labor 1.72 

Material,  less  labor 3.33 

Hire  of  equipment  and  buildings 2.46 

.Hire  of  tracks  and  terminals 4.60 

Damages  and  injuries 1.80 

Taxes 3.56 

Interest 13-34 

Deficits 2.39 

Total $91.21 

Betterments  to  property,  etc 4.37 

Dividends 4.42 

$100.00 

Out  of  each  one  hundred  dollars,  ninety-one 
dollars  was  paid  out  for  labor,  material,  taxes, 
rents,  interest,  all  of  which  must  be  paid  if  the 
railway-owner  is  to  keep  out  of  the  hands  of  the 

17 


THE  TRUTH  ABOUT  THE  RAILROADS 

sheriff.  The  balance,  nine  dollars,  was  avail- 
able for  improving  the  property  and  for 
dividends,  and  the  margin  is  very  small. 

There  are  1,525,000  railway  employees,  in- 
cluding the  officers,  representing  at  least 
6,000,000  of  the  population  of  this  country. 
They  are  equal,  in  honesty,  intelligence,  in- 
dustry, and  character  to  the  average  of  Ameri- 
can citizens  engaged  in  other  pursuits.  They 
are  trying  to  do  their  part  in  managing  and 
operating  this  great  piece  of  commercial  ma- 
chinery that  the  railway-owner  has  created. 
As  they  are  human,  they  make  mistakes,  and 
sometimes  forget  that  they  assume  an  obliga- 
tion when  they  enter  the  railway  service,  to  be 
honest,  fair,  and  loyal  to  the  railway-owner, 
and  to  the  railway-user.  The  great  army  of 
railway  employees,  in  their  efforts  to  obtain 
the  highest  wages  possible,  must  remember 
that  there  are  only  one  hundred  cents  in  a  dol- 
lar; that  it  is  possible  to  force  wages  to  a  point 
beyond  the  ability  of  the  railway-owner  to  pay 
and  still  maintain  his  plant  for  the  benefit  of 
the  railway-user,  and  that  the  constant  wage- 

18 


OWNER,   EMPLOYEE  AND  USER 

increase  has  already  discouraged  the  railway- 
owner,  and  will  tend  to  discourage  him  more 
unless  additional  revenue  can  be  obtained 
from  the  railway-user.  The  railway-user  often 
fails  to  understand  the  wage  situation,  and  the 
railway  employee  and  the  railway-user  must 
remember  that  in  fixing  wages  they  must  con- 
sider the  ability  of  the  business  to  pay  the 
wages  demanded. 

In  1908,  the  official  figures  show  that  there 
were  1,458,244  railway  employees  receiving 
^1,051,632,225  in  wages,  or  an  average  of 
$721.16  per  year.  For  the  year  1907  the  aver- 
age pay  of  railway  employees  in  the  United 
Kingdom  was  $260;  in  Germany  $371,  in 
Switzerland  $292;  in  Belgium,  where  the  rail- 
ways are  owned  by  the  state,  firemen  received 
$15  to  $23  a  month,  the  higher  rate  only  after 
fifteen  years'  service;  enginemen  from  $22.50 
a  month  to  $28  a  month  after  twenty-four 
years'  service;  conductors  from  $15.97  a 
month  to  $34.70.  The  average  railway  worker 
in  Belgium  gets  43  cents  a  day.  Certain  classes 
of  American  railway  employees  get  more  in  a 

19 


THE  TRUTH  ABOUT  THE  RAILROADS 

month  than  Belgium  railway  employees  aver- 
age in  a  year. 

The  advances  made  in  wages  in  1906  and 
1907  increased  the  payrolls  of  the  railways 
about  ^120,000,000,  and  increases  since  then 
and  now  under  discussion  mean  $60,000,000 
to  $75,000,000  additional.  These  two  Increases 
are  equal  to  7  per  cent  per  year  on  a  capitaliza- 
tion of  from  $2,500,000,000  to  $2,750,000,000, 
a  sum  of  money  that  would  go  a  long  way  in 
adding  to  the  transportation  facilities  of  the 
country. 

The  railway  employee  has  a  responsibility 
to  the  railway-user  to  be  sober,  industrious, 
and  careful,  so  as  to  furnish  the  best  and  safest 
transportation  to  the  public,  and  he  has  a  re- 
sponsibility to  the  railway-owner  to  furnish  a 
full  day's  honest  and  efficient  work  for  the  com- 
pensation that  he  receives,  whatever  it  maybe. 
The  industrial  supremacy  of  America  cannot 
be  maintained  unless  that  is  done,  and  every 
patriotic  man,  no  matter  what  his  employment, 
should  stop  waste  in  labor  as  well  as  in  mate- 
rial, and  expect  hard  work  and  rigid  economy. 

20 


OWNER,  EMPLOYEE  AND  USER 

Suppose  each  one  of  the  railway  employees 
should,  by  better  work  and  greater  care,  save 
only  one  cent  a  day;  that  would  mean  for  the 
country  ^5,566,250  a  year,  or  enough  to  buy 
between  5000  and  6000  freight-cars ;  or,  enough 
to  build  two  hundred  miles  of  branch-line  rail- 
way in  Montana.  If  they  could  save  ten  cents 
a  day,  it  would  mean  ^55,662,550  a  year, 
which  could  be  applied  to  adding  to  the  rail- 
way facilities  in  the  country. 

In  addition  to  the  1,525,000  employees 
working  directly  for  the  railways,  there  are 
2,500,000  in  coal  mines,  steel  mills,  manufac- 
turing plants,  all  supplying  what  is  necessary 
for  the  railways  in  their  operations,  who  repre- 
sent at  least  10,000,000  of  our  total  popula- 
tion. So  the  railway  employees  and  the  em- 
ployees of  the  industries  dependent  more  or 
less  on  the  maintenance  of  railways  on  a  sound 
basis  represent  approximately  16,000,000  peo- 
ple whose  rights  must  be  considered. 

The  railways  are  the  great  purchasers  of 
materials  of  many  kinds,  and  the  moment  they 
are  forced  to  stop  buying,  the  effect  begins  to 

21 


THE  TRUTH  ABOUT  THE  RAILROADS 

be  felt  in  the  forest,  the  mine,  the  mill,  and  the 
factory. 

Of  the  90,000,000  people  in  the  United 
States,  there  are,  as  already  pointed  out, 
about  4,000,000  interested  directly  as  railway- 
owners  and  their  dependent  families ;  6,000,000 
as  railway  employees  and  their  dependent 
families,  leaving  80,000,000  as  railway-users, 
with  an  indirect  interest  in  the  prosperity  of 
the  railway.  Some  of  these  80,000,000  are 
vitally  interested,  because  they  work  for  indus- 
tries dependent  upon  the  purchasing  power  of 
the  railway  for  their  success;  others  because 
they  have  their  savings  in  banks  and  trust 
companies  ;  others  because  they  hold  life- 
insurance  policies  for  the  protection  of  their 
families,  and  fire-insurance  policies  for  the  pro- 
tection of  their  homes  and  business;  and  all 
are  interested  in  having  enough  transportation 
and  good  and  safe  transportation. 

The  railway-user,  however,  is  too  apt  to 
think  that  his  interest  lies  in  having  railway 
rates  constantly  reduced,  railway  wages  con- 
stantly raised,  and  railway  taxes  constantly  in- 

22 


OWNER,   EMPLOYEE  AND  USER 

creased,  forgetting  that  It  Is  equally  important 
to  him,  and  really  more  important,  to  have  the 
railway  system  of  the  United  States  so  han- 
dled that  capital  will  feel  safe  In  adding  to  in- 
vestments necessary  to  furnish  the  transporta- 
tion that  the  business  of  the  country  demands. 
Already,  in  certain  parts  of  the  country,  the 
margin  between  adequate  and  inadequate 
transportation  is  too  small.  Only  last  winter, 
between  the  Missouri  River  and  Chicago,  and 
in  the  vicinity  of  Chicago,  the  railways  could 
not  furnish  that  prompt  and  regular  service 
that  Is  essential  for  a  satisfactory  movement 
of  the  commerce  of  the  country. 

The  railway-user  needs  safe  and  adequate 
transportation,  and  It  will  be  furnished  just  so 
long  as  the  business  pays.  The  railway-owner 
cannot  constantly  be  borrowing  money  for 
every  minor  improvement  and  addition  to  the 
property.  The  cry  Is  sometimes  raised  that  the 
railways  should  not  make  improvements  out 
of  current  earnings.  They  should  not  make  all 
of  their  improvements  out  of  current  earnings, 
but  they  should  put  back  into  the  property 

^3 


THE  TRUTH  ABOUT  THE  RAILROADS 

every  year  a  substantial  amount  of  their  earn- 
ings for  improvements  like  better  passenger- 
stations,  more  side  tracks,  better  rails,  better 
ballast,  safety  appliances,  and  other  forms  of 
improvement  of  which  the  present  generation 
of  railway-users  get  the  immediate  benefit,  as 
well  as  making  possible  a  higher  development 
of  the  country  for  their  children  and  grand- 
children. 

[.The  railway-owner,  the  railway  employee, 
and  the  railway-user  must  cooperate,  and  all 
must  remember  the  definition  of  cooperation, 
—  "the  association  of  a  number  of  persons  for 
their  common  benefit."  In  the  long  run  it  will 
not  benefit  the  railway-user  to  crowd  down 
rates  so  low  and  raise  taxes  so  high  that  he 
takes  away  all  chance  of  profit  from  the  rail- 
way-owner. The  railway  employee  must  re- 
member that  in  the  long  run  he  will  not  profit 
if  he  crowds  up  wages  so  high  that  the  railway- 
owner  has  not  sufficient  margin  for  the  devel- 
opment of  the  facilities  along  progressive  and 
safe  lines.  On  the  other  hand,  the  railway- 
owner  must  in  fixing  the  rates  do  so  in  such  a 

24 


OWNER,   EMPLOYEE  AND  USER 

way  that  a  healthy  development  of  the  coun- 
try will  be  promoteST] 

Individually,  the  railway-owner,  the  railway 
employee,  and  the  railway-user,  when  they 
discuss  the  subject,  are  fair  and  agree  there 
should  be  fair  treatment  to  all.  There  is,  how- 
ever, a  school  of  politicians  who  make  wild  and 
extravagant  statements  and  who  are  assuming, 
without  knowing  the  facts  and  without  ade- 
quate study  of  the  situation,  that  great  injus- 
tices are  being  done.  It  is  important  for  the 
railway  employee  and  the  railway-user  to  post 
themselves  about  this  general  subject  if  they 
are  to  continue  to  exercise  their  present  con- 
trol in  the  management  of  the  business  of  the 
railway-owner.  His  business  is  now  an  open 
book,  and  every  transaction  is  recorded  in  plain 
black  and  white  and  reported  at  frequent  in- 
tervals to  railway  commissions,  state  or  na- 
tional. The  charges  that  he  makes  for  service 
performed  are  largely  decided  by  statute  or  by 
railway  commissions.  Many  of  the  rules  under 
which  he  conducts  his  business  are  made  by 
law,  or  by  various  boards.  The  railway-user, 

25 


THE  TRUTH  ABOUT  THE  RAILROADS 

> 

if  he  wants  the  best  railways  and  progressive 
development  of  them,  must  see  to  it  that  his 
law-makers  and  his  boards  of  one  kind  and  an- 
other are  the  right  kind  of  men,  and  that  they 
look  at  this  question,  not  in  a  narrow,  partisan 
way,  but  in  a  broad,  far-sighted  manner. 

On  January  i6,  1905,  Senator  Elkins  intro- 
duced into  the  United  States  Senate  a  resolu- 
tion asking  the  Interstate  Commerce  Com- 
mission for  a  statement  showing  the  work  done 
by  that  body  with  respect  to  formal  and  in- 
formal complaints,  hearings,  decisions  of  the 
courts,  exorbitant  rates  and  rebates  during  the 
preceding  eighteen  years,  or  since  the  creation 
of  the  Commission.  On  May  i,  1905,  the 
Commission  furnished  figures  showing  that 
the  total  number  of  complaints  which  reached 
the  Commission  was  9099  and  the  total  num- 
ber disposed  of  through  the  friendly  offices  of 
the  Commission,  9054,  or  more  than  99  per  cent 
of  the  total.  The  cases  appealed  by  the  Com- 
mission to  the  courts  were  only  45  —  about 
one  half  of  i  per  cent  of  the  total  number  of 
cases.  Of  the  45  cases  appealed  to  the  courts 
26 


OWNER,   EMPLOYEE  AND  USER 

by  the  Commission,  only  8,  or  less  than  one 
fifth,  were  sustained  by  the  courts,  all  of  which 
involved  unjust  discriminations  (always  a  dif- 
ficult question  in  our  complicated  commercial 
life),  and  not  a  single  case  involved  an  exorbi- 
tant rate.  Of  the  total  number  of  complaints 
made  to  the  Commission,  83 19,  or  91  per  cent, 
were  of  so  simple  and  unimportant  a  character 
that  they  were  disposed  of  informally. 

During  these  eighteen  years  the  separate 
freight  transactions  of  the  railways  in  the 
United  States  were  in  excess  of  3,000,000,000, 
or  there  was  one  complaint  for  each  330,000 
separate  commercial  transactions,  and  not  a 
single  serious  complaint  about  exorbitant 
rates.  Certainly  a  marvelous  record  of  com- 
pliance with  a  law,  and  one  not  equaled  any- 
where in  the  history  of  the  statutes  regulating 
human  conduct,  —  a  compliance  that  should 
refute  completely  the  idea  that  the  railway 
business  needs  some  peculiar  treatment  by 
law  that  is  not  required  by  other  business  and 
the  idea  that  the  railways  do  not  try  to  obey 
the  law. 

27 


THE  TRUTH  ABOUT  THE  RAILROADS 

The  cost  to  the  country  of  the  Commerce 
Commission  in  1888  was  ^97,867,  and  in  1909, 
^988,936. 

In  the  past,  complaint  has  been  made  be- 
cause the  railways  engaged  in  politics;  to-day 
the  country  is  confronting  a  danger  which  is 
just  as  serious,  if  not  more  so,  because  politics 
is  now  taking  charge  of  the  railways  and 
other  forms  of  business,  and  assuming  the  re- 
sponsibility of  many  parts  of  the  management, 
but  with  no  responsibility  for  the  financial 
results.  The  railway-owners  and  the  railway 
officers  and  employees  are  just  as  loyal,  high- 
minded,  and  energetic  and  industrious  citizens 
of  the  United  States,  as  a  class,  as  any  other 
body  of  men  in  the  country.  They  have  a  great 
task  imposed  upon  them,  which  they  are 
manfully  trying  to  carry  out,  and  at  times  it 
seems  as  if  every  man's  hand  was  against 
them. 

Edward  Everett  Hale,  one  of  the  grand  old 
men  of  the  nineteenth  century,  put  into  four 
short  sentences  some  very  sound  philosophy 
about  life :  — 

28 


OWNER,   EMPLOYEE  AND  USER 

"Look  up,  and  not  down; 
Look  out,  and  not  in; 
Look  forward,  and  not  back; 
Lend  a  hand." 

Will  not  greater  progress  be  made  in  trying  to 
put  this  great  railway  business  on  a  sound 
basis,  if  all  who  are  interested  "  look  up  "  at  the 
best  features  of  it  and  of  the  men  engaged  in 
it,  and  do  not  assume,  without  knowing,  that 
the  business  is  conducted  improperly  and  that 
the  men  giving  their  lives  to  the  work  are  in- 
competent or  dishonest?  Will  not  the  best  re- 
sults come  if  all  "look  out"  from  their  own 
surroundings  and  see  the  difficulties  confront- 
ing others  as  well  as  themselves,  instead  of 
thinking  only  of  their  selfish,  local  advance- 
ment? Will  not  the  best  results  be  obtained  if 
all  "look  forward"  with  hope  to  the  future,  in- 
stead of  repining  over  the  mistakes  that  may 
have  been  made  honestly  in  the  past  in  the 
effort  to  put  the  United  States  on  a  sound  in- 
dustrial basis?  Better  than  all,  will  not  the 
best  results  be  obtained  if  every  one  "lends  a 
hand,"  and  helps  instead  of  raising  all  sorts  of 

29 


THE  TRUTH  ABOUT  THE  RAILROADS 

objections,  —  many  of  which  are  not  justified 
when  the  facts  are  known,  —  magnifying  the 
errors,  and  minimizing  the  good  work  done  ? 

The  future  welfare  of  the  railway  system  of 
the  United  States  is  largely  in  the  hands  of 
the  railway-user,  and  what  will  he  do?  Will  he 
crowd  the  railway-owner  so  hard  that  the 
latter  cannot  produce  the  increasing  amount 
of  transportation  needed  for  the  free  flow  of 
the  commercial  life-blood  of  the  nation  ?  Then 
what?  The  railway-user  will  have  several 
courses  open  to  him.  He  can  have  a  less  rigid 
system  of  regulation  and  government  red  tape 
and  encourage  the  railway  business  and  the 
railway-owner  to  go  on  as  does  other  business, 
subject  to  the  great  laws  of  supply  and  de- 
mand, competition,  and  the  natural  desire  of 
the  owner  to  manage  his  business  in  such  a 
way  that  it  will  be  a  success,  with  the  hope  of 
profit,  which  is  the  main  incentive  of  all  busi- 
ness. Or,  he  can  take  over  the  ownership  and 
management  of  the  railways  and  become 
responsible  for  their  operation  and  for  the 
money  needed  for  additions  and  betterments 

30 


OWNER,   EMPLOYEE  AND  USER 

to  existing  properties,  and  for  the  building  of 
new  ones.  In  the  present  state  of  poHtics  in 
this  countr)'',  such  a  plan  is  almost  terrifying 
in  its  possibilities,  because  the  Government 
has  not  shown  that  it  can  do  work  of  this 
character  as  efficiently  and  economically  as 
private  individuals  can.  Government  owner- 
ship, management,  and  development  of  the 
railways  would  become  a  matter  for  the  politi- 
cians to  trade  upon.  Just  recently,  in  Austria, 
there  has  been  considerable  discussion  because 
the  railways  were  taken  over  by  the  state  on 
the  theory  that  better  service  and  lower  rates 
would  be  given  to  the  public.  Now  there  is 
agitation  to  put  them  back  into  private  hands, 
for,  instead  of  proving  profitable,  there  is  a 
heavy  annual  deficit,  which  the  general  tax- 
payer has  to  make  up.  The  service  has  deteri- 
orated and  railway-expansion  has  ceased.  Or 
he  can  continue  the  present  system  of  rigid 
governmental  control  and  supervision,  and 
interference  with  the  judgment  and  manage- 
ment of  the  owner,  which  is  rapidly  having 
a  deadening  and  discouraging  effect  on  the 

31 


THE  TRUTH  ABOUT  THE  RAILROADS 

development  of  the  business,  and  Is  preventing 
those  additions  and  Improvements  so  much 
needed  In  a  growing  country  like  the  United 
States.  Or  he  can  continue  the  present  sys- 
tem of  government  regulation  and  control,  but 
guarantee  to  the  railway-owner  some  minimum 
return  upon  his  investment,  so  he  will  be  will- 
ing to  put  money  into  the  business.  Such  a 
plan,  however,  means  that  the  non-user  of  the 
railway  will  be  taxed  for  the  benefit  of  the 
user. 

To  my  mind  the  first  course,  of  more  com- 
mercial freedom,  is  by  far  the  better  for  a 
growing  and  expanding  country  like  the 
United  States.  We  have  not  yet  reached  the 
state  of  perfection,  politically  or  socially, 
where  government  ownership  and  bureaucratic 
management  of  the  large,  complicated,  and 
delicately  adjusted  railway  system  of  the 
country  will  be  a  success.  Putting  a  govern- 
ment uniform  on  a  railway  employee  does  not 
at  once  endow  him  with  a  new  kind  of  intelli- 
gence and  supernatural  powers,  and  it  will 
reduce  his  feeling  of  responsibility. 

32 


OWNER,   EMPLOYEE  AND  USER 

If  the  railway-user  and  the  railway  employee 
are  not  careful  to  see  that  justice  is  done  to  the 
railway-owner,  and  if  he  is  not  protected  and 
encouraged  a  little,  the  time  is  rapidly  coming 
when  the  railway-user  will  go  to  buy  some 
transportation  for  his  wheat,  his  coal,  his 
cattle,  his  manufactured  articles,  and  he  will 
be  confronted  with  the  statement  from  the 
railway-owner  that  all  the  transportation  he 
has  has  been  sold,  and  furthermore,  that  he 
cannot  produce  any  more  transportation  be- 
cause he  cannot  get  any  more  money,  and  if 
the  railway-user  desires  an  increased  quantity 
or  quality  of  transportation  he  must  organize 
and  produce  it  for  himself.  The  railway  em- 
ployee will  find  that  the  monthly  pay-day  is 
not  so  regular  and  certain  as  it  used  to  be,  and 
that  the  wages  paid  are  lower. 

The  ultimate  good  sense  of  the  American 
people  and  their  belief  in  the  rights  of  property 
will,  in  the  long  run,  I  believe,  prevail  over  the 
misstatements  and  misrepresentations  of  some 
public  men  who,  without  careful  study  and 
full  knowledge  of  the  situation,  and  without 

33 


THE  TRUTH  ABOUT  THE  RAILROADS 

due  regard  to  the  effect  of  their  extravagant 
language,  make  indiscriminate  attacks  upon 
the  railway  system  of  the  United  States,  and 
upon  the  men  who  are  giving  the  best  that  is 
in  them  to  the  work  of  advancing  that  system. 


II 

THE   INDIVIDUAL,   THE   CORPORATION,   AND   THE 
GOVERNMENT » 

The  welfare  of  the  people  of  this  country, 
of  the  manufacturers,  and  of  all  business,  in- 
cluding the  railroad  business,  is  interdepend- 
ent, and  in  the  long  run  there  must  be  proper 
relations  between  them  and  the  Government 
and  fair  and  reasonable  treatment  of  and 
by  each  to  permit  that  progress  in  this  country 
which  its  marvelous  resources  and  intelligent 
population  justify. 

Railroading  is  a  business,  and  is  conducted 
under  much  the  same  conditions  as  the  manu- 
facturing business  and  has  many  of  the  same 
problems  and  difficulties.  There  are  three 
important  differences,  however,  between  the 
manufacturing  business  and  the  railroad 
business.  The  first  is  that  manufacturers  can 

*  Address  delivered  before  the  National  Association  of 
Manufacturers,  New  York,  May  17,  191 1. 

35 


THE  TRUTH  ABOUT  THE  RAILROADS 

close  their  establishments,  reduce  their  ex- 
penses to  the  necessary  caretakers  and  lose  the 
interest  on  their  investment  until  such  time  as 
their  inclinations  or  the  demands  for  their 
particular  articles  make  it  worth  while  to 
operate  their  plants.  The  railroad,  however, 
cannot  stop;  once  started,  it  must  go  on  unless 
the  owners  choose  to  abandon  it  absolutely, 
and  lose  not  only  all  chance  of  interest  on  their 
money,  but  the  entire  principal  as  well.  The 
second  is  that  most  manufacturers  can  ware- 
house their  product,  hold  for  rising  prices,  and 
sell  at  some  future  time.  The  railroad  cannot 
do  this.  It  must  have  ample  transportation 
ready  at  any  given  time  and  place,  and  if  it  is 
not  used  then  and  there  it  is  lost,  not  only  to 
the  railroad,  but  to  the  consumer.  The  manu- 
facturer of  transportation  must  always  be 
ready  to  furnish  the  maximum  amount  of 
transportation  for  the  use  of  the  American 
people.  In  other  words,  he  must  be  ready  for 
the  "peak  load"  at  any  time.  This  "readiness 
to  serve"  means  a  great  investment  and  a 
great  expense  which  is  given  far  too  little  con- 

36 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

sideration  by  those  who  now  make  the  numer- 
ous laws,  rates,  rules,  and  regulations  aflfecting 
the  railroads.  There  should  be  enough  margin 
of  profit  in  the  business  so  that  at  all  times  and 
places  there  will  be  this  "readiness  to  serve." 
The  third  difference  is  that  manufacturers  have 
some  control  over  their  prices.  In  times  of  a 
great  demand  for  any  article  they  can  and  do 
increase  their  unit  prices,  and  in  poor  times 
they  are  at  liberty  to  reduce  them  to  encourage 
trade,  with  no  fear  that  later  on  they  will  be 
forbidden  by  the  Government  to  advance 
them.  They  can  meet  competition  and  take 
on  extra  business  without  cutting  their  entire 
scale  of  prices.  In  the  railroad  business  an 
excessive  demand  not  only  brings  no  increase 
in  the  unit  price,  but  legislatures  and  commis- 
sions, which  have  practically  taken  charge 
of  the  management  of  the  railroads  (except 
the  responsibility  of  their  finances),  more  and 
more  take  the  view  that  an  increasing  demand 
justifies  lower  prices,  thus  reversing  the  old- 
fashioned  law  of  suppl}^  and  demand. 
The  so-called  railroad  question  has  been 
37 


THE  TRUTH  ABOUT  THE  RAILROADS 

magnified  and  much  distorted  by  politicians 
and  doctrinaires.  The  people  have  been  led  to 
believe  that  the  railroad  business  is  very  dif- 
ferent from  other  forms  of  business  and  that 
it  can  be  successfully  conducted  under  many 
severe  legislative  handicaps  and  according  to 
rigid  mathematical  formulas.  That  it  has  sus- 
tained itself  to  the  present  time  is  due  to  the 
great  growth  of  the  country  and  to  the  patient, 
able,  and  courageous  work  of  men  who  have 
devoted  their  lives  to  the  business.  It  has 
achieved  moderate  success,  not  because  of 
legislative  interference  and  tinkering,  but  in 
spite  of  them. 

What  is  business.^  Professor  James  Mark 
Baldwin,  in  his  volume  "The  Individual  and 
Society,"  says  that  "business  has  to  do  with 
the  production  and  distribution  of  valuable 
things;  money,  utensils,  anything  for  which 
there  is  a  demand  in  society,  or  on  which  soci- 
ety or  some  individuals  of  it  set  value";  and 
again,  "to  produce  such  things  in  response  to 
the  demand  and  to  distribute  them  to  those 
from  whom  the  demand  comes,  is  the  under- 

38 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

taking  of  business."  Here  is  set  forth  very 
clearly  the  idea  that  the  distribution  of  things 
is  business  just  as  much  as  is  the  production  of 
them.  One  of  our  troubles  in  this  country  is 
the  result  of  the  fact  that  we  have  wandered 
away  from  the  common-sense  view  that  rail- 
roading is  business.  Naturally  there  always 
has  been,  and  always  will  be,  a  difference  of 
opinion  between  the  buyers  and  the  sellers 
as  to  quality  and  price  of  articles  traded  in, 
and  only  when  there  are  reasonable  and  fair 
men  in  business  and  reasonable  and  fair  rules 
governing  business  will  men  continue  in  busi- 
ness. 

There  are  four  great  primary  forms  of  busi- 
ness: agriculture,  transportation,  manufactur- 
ing, and  mining.  As  these  grow,  prosper,  and 
interweave,  conditions  are  created  that  pro- 
duce the  many  other  forms  of  business  that 
have  been  so  successful  in  this  country,  — 
merchandising,  banking,  insurance,  etc.,  —  all 
essential  to  progress,  but  none  of  which  can 
prosper  unless  the  four  great  primary  occupa- 
tions prosper,  and  this  they  cannot  do  unless 

39 


THE  TRUTH  ABOUT  THE  RAILROADS 

they  are  fairly  treated  by  the  Government  and 
the  people. 

The  United  States  is  a  big  nation,  and  I  use 
the  word  "is"  purposely  because  the  growth 
of  the  country  and  the  development  of  business 
has  been  so  great  that  more  and  more  must  we 
think  and  act  "continentally."  We  can  no 
longer  conduct  our  affairs  on  the  basis  that  the 
United  States  "are"  a  big  nation.  This  very 
fact  of  size  is  important  in  its  bearing  on  the 
industrial,  railroad,  and  economic  questions 
of  the  day.  Being  a  big  nation,  we  need  big 
tools  to  do  our  work.  We  must  have  big  rail- 
roads; we  must  have  big  banks;  we  must  have 
big  lumber  operations;  we  must  have  big 
insurance  companies ;  we  must  have  big  manu- 
facturing establishments.  In  working  out  the 
problem  of  providing  food,  shelter,  clothing, 
heat,  light,  and  transportation  for  the  Ameri- 
can people  we  have  developed  great  systems 
of  railroads,  great  industrial  corporations, 
great  financial  institutions.  They  are  neces- 
sary and  should  not  be  condemned  simply 
because  of  their  bigness.   Yet  some  critics  of 

40 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

the  American  railroad  and  business  situation 
are  using  the  words  "system"  and  "big  busi- 
ness" as  if  they  were  in  and  of  themselves  a 
crime  against  society  and  inimical  to  the  for- 
ward march  of  the  country  to  a  higher  and 
better  order  of  things. 

To  bring  out  some  points  it  will  be  necessary 
to  burden  you  with  some  figures  showing  the 
growth  of  the  country.  The  continental  area 
of  the  United  States  has  increased  from 
820,377  square  miles  in  1800  to  2,974,159  in 
1910.  In  1800,  305,708  square  miles  had  at 
least  two  persons  to  the  mile  and  in  1900, 
1,925,590  square  miles  had  that  number  or 
more  per  square  mile.  In  1800  the  population 
of  the  country  was  5,308,483,  of  which  only  4 
per  cent  lived  in  places  having  8000  or  m^ore 
people,  while  in  1910  the  population  was 
91,972,266,  and  probably  40  per  cent  lived  in 
places  of  8000  or  over.  In  1910  in  228  cities  of 
25, 000  population  or  over  there  were  28, 508,007 
of  people  or  3 1  per  cent  of  our  population.  In 
1840,  77.5  per  cent  of  the  people  at  work  were 
employed  in  agriculture,  and  in  1900,  35.7  per 

41 


THE  TRUTH  ABOUT  THE  RAILROADS 

cent.  In  1840  only  1,013,663  people,  or  21. 1 
per  cent  of  all  at  work,  were  employed  In  com^ 
merce,  manufacturing,  mining,  and  transpor- 
tation, and  in  1900,  11,852,273,  or  40.8  per 
cent,  were  so  employed,  and  the  proportion 
was  no  doubt  even  greater  in  19 10.  These 
figures  show  clearly  how  our  people  have 
drifted  to  towns  and  cities  and  how  important 
it  is  that  the  great  primary  occupations  of 
agriculture  and  transportation  be  successful 
and  adequate  if  we  are  to  have  food  and  if  we 
are  to  avoid  those  difficulties  that  are  incident 
to  densely  crowded  cities.  The  great  railroads 
and  the  great  industrial  corporations  are  all 
doing  work  in  the  direction  of  encouraging 
wise  conservation  of  resources.  The  country- 
life  movement  is  a  good  sign,  and  every  patri- 
otic American  should  do  what  he  can  to  help 
such  movements,  and  to  create  a  public  opin- 
ion that  gives  as  much  credit,  if  not  more,  to 
the  wholesome  farmer  and  his  wife  and  chil- 
dren, as  to  the  dweller  in  the  town  and  city. 

Manufacturing  in  this  country  has  increased 
from  140,433  plants  in  i860,  with  $1,009,855,- 

42 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

715  of  capital  and  1,311,246  employees  re- 
ceiving $378,878,966  in  wages  to  533,769 
plants  in  1905  with  $13,872,035,371  of  capital 
and  6,723,926  employees  receiving  $3,625,- 
911,957  in  wages.  In  i860  the  value  of  the 
products  of  the  manufacturing  plants  was 
$1,885,861,676,  and  in  1905  it  was  $16,866,- 
706,985.  In  1850  there  were  only  8,571.48 
miles  of  railroad  in  the  United  States,  or  3.71 
miles  for  each  10,000  people,  and  in  1909  there 
were  236,868.53  miles  of  railroad  and  342,351 
miles  of  track,  or  37.2  per  10,000  people.  In 
1880  the  gross  earnings  of  the  railroads  were 
$615,401,931.  In  1909  they  were  $2,418,677,- 
538.  In  1888  American  railroads  transported 
61,329,000,000  tons  one  mile,  and  in  1910  they 
transported  250,418,000,000  tons  one  mile, 
an  increase  of  324  per  cent  in  volume  of  ser- 
vice, and  the  rate  per  ton-mile  the  railroads 
received  declined  24.5  per  cent.  In  1888  they 
carried  10,101,000,000  passengers  one  mile, 
and  in  1910,  33,270,000,000,  an  increase  of 
229  per  cent,  though  the  average  receipts  per 
passenger  per  mile  declined  26.9  per  cent  in 

43 


THE  TRUTH  ABOUT  THE  RAILROADS 

that  period.  Mileage  of  freight-trains  increased 
80  per  cent  and  of  passenger-trains  112  per 
cent,  showing  how  much  improved  is  the  ser- 
vice of  to-day  to  thousands  of  scattered  com- 
munities. In  1880  the  par  value  of  all  railroad 
securities  outstanding  was  $5,004,521,666.08, 
and  in  1909,  $13,914,302,363  at  par  in  the 
hands  of  the  public  represented  the  railroad 
property  of  the  United  States,  including  the 
great  terminals,  large  equipment,  lands,  cash, 
and  miscellaneous  investments  of  all  kinds,  or 
a  capitalization  of  less  than  $60,000  a  mile  of 
railroad  and  less  than  $41,000  a  mile  of  tracks 
But  the  real  capital  in  the  railroad  business  is 
all  the  property  owned  and  not  the  cost  of  the 
property  or  the  amount  of  securities  issued. 
In  fact,  the  securities  issued  against  American 
railroads  as  a  whole  to-day,  in  my  judgment, 
are  much  less  than  their  fair  value  as  "going 
concerns." 

In  what  is  known  as  the  Minnesota  Rate 
Case,  just  decided  by  Judge  Walter  H.  San- 
born of  the  United  States  Circuit  Court,  a 
judicial  valuation  of  the  railroad  property  of 

44 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

the  Northern  Pacific  Railway  Company  was 
made.  This  case  was  tried  most  thoroughly, 
the  testimony  being  taken  before  a  master,  ex- 
Judge  Charles  E.  Otis,  and  lasting  nearly  four 
years.  Many  expert  witnesses  were  called  on 
behalf  of  the  railroad  and  the  State,  and  elab- 
orate statements  of  valuations  were  submitted, 
analyzed,  and  dissected.  The  testimony  in  the 
Northern  Pacific  case  filled  4258  pages,  and 
the  special  statements  supplementary  thereto 
filled  two  volumes.  As  a  result  of  this  search- 
ing examination,  the  master  on  September  21, 
1910,  submitted  his  findings  and  recommenda- 
tions. He  found  that  the  value  of  the  property 
of  the  Northern  Pacific  Railway  Company 
employed  in  its  transportation  business  was 
on  June  30,  1908,  ^452,666,489,  as  compared 
with  securities  in  the  hands  of  the  public  at 
that  time  amounting  at  par  to  ^405,225,575.29. 
These  securities  represent  not  only  the  rail- 
road property  used  for  transportation  pur- 
poses, but  a  large  amount  of  other  property, 
such  as  land,  coal  mines,  new  roads  under 
construction,  several  important  pieces  of  rail- 

45 


THE  TRUTH  ABOUT  THE  RAILROADS 

road  recently  acquired  and  constructed,  im- 
portant terminal  property,  treasury  securities, 
and  cash. 

In  passing  upon  the  findings  of  the  master, 
Judge  Sanborn  used  the  following  language: 
"The  master  found  the  original  cost  of  the 
acquisition  and  construction  of  the  entire  rail- 
road systems  of  each  of  the  companies  and  the 
proportion  thereof  assignable  on  a  track  mile- 
age basis  to  Minnesota.  The  amounts  thus 
found  prove  to  be  much  less  than  the  values 
ultimately  found  by  the  master,  and  for  this 
very  good  reason:  These  railroads  were  pio- 
neers; they  were  built  in  large  part  over  the 
prairies  of  Minnesota  before  they  were  settled 
and  before  many  of  the  existing  towns,  vil- 
lages, and  cities  along  their  lines  came  into 
existence.  A  large  part  of  the  right  of  way  of 
the  Northern  Pacific  Company  was  granted 
to  it  by  the  nation.  The  cost  of  rights  of  way 
from  five  to  forty  years  ago  through  wild  lands, 
and  through  towns  and  villages  whose  popula- 
tion and  the  value  of  the  property  in  which 
have  since  been  multiplied  by  from  two  to  ten, 

46 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

is  obviously  no  criterion  of  the  value  of  those 
rights  of  way  in  1908,  when  they  were  used 
under  these  fares  and  rates  and  when  agricul- 
tural lands  in  Minnesota  were  worth  from  ^35 
to  ^100  an  acre,  and  rights  of  way  and  lands 
for  yards  and  sites  for  stations  in  cities  like  St. 
Paul  and  Duluth  have  wonderfully  increased 
in  value.  It  is  a  fair  return  upon  the  reasonable 
value  of  their  Minnesota  property  in  1908  to 
which  these  companies  were  entitled,  and  the 
cost  of  that  property  at  times  varying  from 
five  to  forty  years  ago  may  be  some  evidence, 
but  it  is  certainly  no  criterion  of  its  value  in 
that  year.  In  view  of  these  facts  the  master 
rightly  decided  that  the  cost  of  reproducing 
this  property  new  was  a  more  rational  and 
reliable  measure  of  its  real  value  than  the 
original  cost  of  its  acquisition  and  construc- 
tion or  the  market  values  of  the  stocks  and 
bonds  of  the  companies,  and  upon  that  basis 
he  made  his  findings." 

Here  is  shown  conclusively  that  the  fair 
value  of  this  one  railroad  is  very  much  in  excess 
of   the   securities   issued,    and   this   judicial 

47 


THE  TRUTH  ABOUT  THE  RAILROADS 

valuation  is  the  best  of  evidence  that  there  is 
no  water  in  the  securities  of  this  particular 
company. 

Four  Western  States  have  made  careful 
valuations  of  the  railroads  within  their  borders, 
and  the  commissions,  if  they  err  at  all,  have 
not  made  mistakes  in  favor  of  the  railroads- 
The  results  were  as  follows :  — 

Cost  of  reproduction  Capitalization 

Washington  (1905) $194,057,240  $161,582,000 

South  Dakota  (1908) 106,494,503  109,444,600 

Minnesota  (1907) 360,961,548  300,027,676 

Wisconsin  (1909) 296,803,322  225,000,000 

Total $958,3 16,613  $796,054,276 

In  Minnesota  and  Washington  the  valuations 
made  by  the  railroads  at  the  same  time  were 
considerably  in  excess  of  those  made  by  state 
authority,  and  there  is  good  reason  to  believe 
that  they  were  made  more  thoroughly  and 
accurately  than  those  made  by  the  States. 
Even  on  the  lower  valuations  made  by  the 
States  the  capitalization  is  less  than  the  cost  of 
reproduction. 

There  is  every  reason  to  assume  that  a 
similar  careful  calculation  and  computation 

48 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

of  the  value  of  American  railroads  as  a  whole 
will  prove  their  value  to  be  greater  than  their 
capitalization. 

There  were  in  1900  engaged  in  manufactur- 
ing, mechanical  pursuits,  trade,  and  transpor- 
tation nearly  12,000,000  persons.  No  very 
complete  figures  exist  of  the  exact  number  of 
persons  belonging  to  labor  unions,  but  it  is 
thought  that  the  number  is  not  more  than 
3,000,000,  or  about  25  per  cent  of  the  total 
number  employed  in  these  four  lines,  which  do 
not  include  agriculture,  in  which  there  are  no 
labor  organizations.  These  figures  clearly 
show  the  growth  of  the  country,  and  how, 
from  the  rather  simple  forms  of  agriculture, 
transportation,  mining,  and  manufacturing, 
that  growth  has  made  necessary  the  great 
instrumentalities  of  business  as  they  now  exist 
and  has  created  the  complex  relations  between 
the  various  forces  that  aflfect  business  to-day. 
Most  of  this  great  development  has  come  since 
the  Civil  War,  or  in  only  forty-five  years,  and, 
as  a  result  of  this  wonderful  forward  march, 
due  largely  to  the  unexcelled  railroad  facili- 

49 


THE  TRUTH  ABOUT  THE  RAILROADS 

ties  of  this  country,  a  very  large  proportion 
of  the  people  of  the  United  States  enjoy  com- 
forts and  even  luxuries  to  a  greater  extent  than 
in  the  period  before  and  just  after  that  great 
conflict,  and  to  a  much  greater  extent  than  the 
people  of  other  nations.  Every  patriotic  Amer- 
ican should  be  grateful  and  proud  of  the  daring 
and  directing  minds  that  have  helped  to  make 
the  country  as  great  and  prosperous  as  it  is. 

These  big  things  could  not  have  been  done, 
and  the  people  of  this  country  could  not  have 
been  fed,  sheltered,  kept  warm,  and  trans- 
ported, had  each  been  forced  to  depend  upon 
his  own  efforts  in  obtaining  what  he  needed 
and  wanted.  Individuals  have,  therefore, 
gradually  banded  themselves  together  into 
partnerships,  corporations,  banks,  trusts,  in- 
surance companies,  labor  unions,  and  other 
forms  of  collectivism,  because  only  through 
cooperation  could  they  do  the  big  work  of  this 
country. 

In  the  last  few  years,  however,  there  has 
grown  up  in  this  country  a  set  of  political 
economists  and  reformers  who  "see  ghosts" 

50 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

and  who  are  Inclined  to  think  that  these  great 
instruments  of  commerce  are  all  wrong  be- 
cause of  their  size  and  that  they  should  be 
regulated,  controlled,  and  managed  in  detail 
by  the  Government.  The  exploitation  of  the 
natural  resources  of  the  United  States  and  the 
really  marvelous  growth  of  the  country  have 
resulted  in  some  large  fortunes  which  catch 
the  public  attention,  but  they  have  also  re- 
sulted in  countless  small  accumulations  of 
property  all  over  the  country,  as  shown  by  the 
deposits  in  the  banks  and  by  the  amount  of 
life  insurance  carried.  In  1850  there  were 
251,354  depositors  in  the  savings  banks  of  the 
country,  with  ^43,431,130  to  their  credit,  an 
average  of  ^172.79;  and  in  1909,  8,831,863 
depositors,  with  $3,713,405,710,  an  average  of 
$420.46.  In  1880  the  individual  deposits  in 
all  banks  were  $2,134,234,861,  and  in  1909, 
$14,108,039,477.  In  1850  there  were  29,407 
life-insurance  policies  for  $68,614,189,  and  in 
1908,  25,852,405  policies  for  $14,518,952,277. 
Every  one  of  these  depositors  and  every  holder 
of  a  life-insurance  policy  has  a  personal  interest 

51 


THE  TRUTH  ABOUT  THE  RAILROADS 

in  seeing  that  justice  is  done  to  the  railroads; 
and  the  railroads  ask  for  nothing  more  than 
simple  justice,  based  on  accurate  knowledge  of 
the  real  facts.  Because  a  very  few  individuals 
have,  by  superior  brains,  industry,  and  even 
luck,  made  large  fortunes,  is  it  wise  to  con- 
demn the  splendid  work  of  the  American 
business  man,  destroy  it,  and  fly  to  socialistic 
evils  that  lead  no  one  knows  where? 

The  great  force  of  collectivism  has  created 
manufacturing  institutions,  railroads,  banks, 
insurance  companies,  labor  unions,  the  Gov- 
ernment itself,  through  the  voluntary  acts  of 
individual  citizens.  These  institutions,  upon 
which  modern  society  so  largely  rests,  cannot 
be  eliminated  from  our  system  of  life.  Unless 
the  chemist  working  with  the  great  forces  of 
nature  uses  them  properly,  he  fails  to  get  the 
result  desired  and  perhaps  has  an  explosion  or 
conflagration.  The  engineer  building  a  water- 
power  or  a  great  engine  will  have  failure,  fric- 
tion, and  disruption  of  his  whole  scheme,  unless 
he  handles  intelligently  the  forces  with  which 
he  is  dealing.  The  great  industrial  and  social 

52 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

forces  must  be  treated  wisely  or  there  will  be 
friction,  explosion,  and  perhaps  disruption. 
The  census  of  1900  reported  21,329,819  male 
persons  of  voting  age  in  the  United  States,  and 
to-day  there  are,  without  doubt,  25,000,000. 
Most  of  them  are  busy  with  their  daily  work, 
taking  care  of  their  families  and  leading  quiet 
and  orderly  lives  and  paying  little  attention 
to  the  great  forces  that  are  at  work  in  this 
country.  Suppose,  however,  that  even  one  per 
cent,  or  250,000  men,  go  about  the  country 
and  preach  on  the  platform  and  in  the  maga- 
zines and  in  the  press  that  everything  is  wrong; 
that  the  rich  are  growing  richer,  and  the  poor 
are  growing  poorer,  and  that  unless  something 
is  done  the  corporations  are  going  to  ruin  the 
country,  —  the  last  thing  they  want  to  do. 
Such  people  can  and  do  make  a  great  deal  of 
noise.  If  nobody  shows  that  they  are  wrong, 
they  make  a  big  impression,  and  the  people 
begin  to  think  that,  instead  of  living  in  the 
best  country  in  the  world  and  under  the  best 
conditions,  they  suffer  from  continually  in- 
creasing evils. 

53 


THE  TRUTH  ABOUT  THE  RAILROADS 

The  old  nursery  rhyme  reads :  — 

"Multiplication  is  vexation, 
Division  is  as  bad, 
The  rule  of  three  doth  puzzle  me, 
And  practice  drives  me  mad." 

Many  of  the  people  who  are  trying  to  tell 
others  how  to  manage  their  business  seem  to 
think  that  "multiplication  is  vexation,"  and 
that  the  great  big  things  accomplished  by  the 
hard-working  men  of  the  United  States  are 
wrong.  They  think  that  "division  is  as  bad," 
and  that,  when  after  earnest  efforts  business 
pays  a  return  or  a  dividend,  the  ability  to  make 
a  profit  must  be  checked.  They  have  lost  all 
sense  of  proportion  and  the  "rule  of  three" 
puzzles  them  badly,  for  they  are  unable  to  see 
how  great  this  country  is  and  what  great  in- 
struments of  commerce  there  must  be.  j, "Prac- 
tice" would  drive  them  mad,  for  very  few  of 
them  have  ever  done  any  actual  work  in  con- 
ducting affairs  about  which  they  so  readily 
instruct  others. 

The  individual  citizen,  having  created  the 
railroad,  the  corporation,  the  trust,  the  labor 

54 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

union,  and  our  form  of  government,  has  been 
too  much  incHned  to  fold  his  hands  and  leave 
the  management  of  his  affairs  to  a  few  without 
much  check  upon  them.  The  member  of  the 
labor  union  too  often,  by  credulously  following 
an  unwise  leader  and  neglecting  to  express  his 
own  views,  has  caused  great  trouble  to  himself 
and  to  society.  The  voter  has  left  the  represent- 
atives in  the  Government  too  much  alone, 
and  the  boss,  graft,  extravagance,  foolish  legis- 
lation, inefficiency,  and  waste  have  resulted. 

The  great  mass  of  the  American  people  are 
honest  and  fair,  and  when  they  really  under- 
stand the  great  questions  of  the  day,  they  will 
solve  them  correctly,  just  as  they  did  the  slav- 
ery and  silver  questions.  But  the  individual 
must  exert  himself  to  obtain  correct  informa- 
tion and  to  form  a  sane  public  opinion.  The 
printing  of  newspapers  and  periodicals  in  this 
country  has  grown  from  11,314  publications  in 
1880,  issuing  2,067,848,209  copies  a  year,  to 
22,603  i^  1909?  issuing  10,600,000,000  copies 
a  year.  It  is  a  sad  fact  that  some  of  these 
publications  print  statements  that  are  not  en- 

55 


THE  TRUTH  ABOUT  THE  RAILROADS 

tirely  correct  and  that  mislead  and  prejudice 
the  unthinking.  Every  individual  can  do  some 
good  by  encouraging  decent  newspapers  and 
by  frowning  upon  yellow  journalism  and  muck- 
raking magazines.  The  schools  of  the  country 
are  teaching  daily  eighteen  and  one  half  mil- 
lion boys  and  girls,  and  every  individual  inter- 
ested in  the  welfare  of  his  country  should  exer- 
cise some  influence  in  seeing  that  common 
sense,  industry,  and  self-denial  are  taught  as 
well  as  some  other  things. 

For  a  long  time  it  has  been  very  fashionable 
to  attack  the  railroads.  They  are  a  big  target. 
The  men  engaged  in  other  forms  of  business 
have  looked  on  and  to  some  extent  have  sym- 
pathized with  such  attacks,  not  realizing  that 
sooner  or  later  their  turn  will  surely  come,  if 
the  crusade  against  large  forms  of  business 
continues.  The  railroad  business  represents 
more  than  1,500,000  employees,  receiving  more 
than  ^1,000,000,000  a  year  in  wages;  and 
about  1,000,000  security-holders.  The  em- 
ployees and  the  numerous  small  owners  of  the 
railroad  as  a  whole  are  hard-working,  consci- 

56 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

entious  people,  whose  principal  capital  is  their 
brains  and  industry  and  a  limited  amount  of 
money  that  they  may  have  saved  from  their 
wages  and  income.  The  daily  lives  of  the  em- 
ployees and  security-holders  of  the  railroads 
are  affected  by  the  success  or  failure  of  the 
railroads,  and  they  are  entitled  to  protection 
and  encouragement  from  the  people  and  the 
Government  equal  to  that  accorded  other 
citizens.  The  owners  of  the  railroads  hold 
securities  worth  at  par  nearly  ^14,000,000,000. 
The  average  net  return  from  railroad  operation 
for  the  year  ending  June  30,  1909,  was  4.07 
per  cent.  In  1905  the  net  income  from  manu- 
facturing Institutions  was  13.06  per  cent. 

At  times  the  Impression  is  given  in  the 
press  that  great  fortunes  have  been  made  and 
are  being  made  In  the  railroad  business.  A 
very  few  have  been  made,  but  not  nearly  so 
many  as  in  manufacturing,  mining,  merchan- 
dising, banking,  lumbering.  Go  Into  any  com- 
munity, and  except  in  rare  instances  It  Is  not 
the  man  building  railroads  or  working  for  them 
who  is  the  rich  man,  or  even  the  well-to-do. 

S7 


THE  TRUTH  ABOUT  THE  RAILROADS 

The  increase  in  the  cost  of  living  in  the  last  five 
years  has  been  reflected  in  many  increases  In 
the  wages  of  the  great  majority  of  the  1,500,000 
employees;  but  the  returns  to  the  security- 
holders, who  also  must  meet  in  their  daily  life 
the  increased  cost  of  living,  not  only  are  not 
increased,  but  in  many  cases  have  been  de- 
creased. Many  of  these  security-holders  are 
persons  of  moderate  means  to  whom  any  loss 
of  income  is  important. 

Judge  Sanborn,  in  his  very  exhaustive  opin- 
ion in  the  Minnesota  Rate  Case,  says  about 
the  return  on  railroad  property:  "Complaint  is 
made  that  the  master  finds  that  the  companies 
are  entitled  to  a  net  return  of  7  per  cent  per 
annum  upon  the  respective  values  of  their 
properties  devoted  to  this  public  use.  The 
character  of  the  business  in  which  an  invest- 
ment is  made,  the  locality  in  which  it  Is  placed, 
the  returns  secured  in  that  locality  from  other 
investments  of  a  similar  nature,  the  uniformity 
and  certainty  of  the  return,  and  the  risks  to 
which  the  principal  and  the  income  from  It 
are  subjected,  condition  the  measure  of  a  fair 

58 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

return  upon  capital  invested.  An  investment 
in  a  bank,  in  a  factory,  in  a  mercantile,  man- 
ufacturing, or  agricultural  business  is  substan- 
tially free  from  regulation  by  the  Government 
and  exempt  from  any  duty  to  the  public  except 
that  of  paying  taxes.  If  the  business  in  which 
such  an  investment  is  made  is  unprofitable, 
its  owners  may  promptly  discontinue  its  oper- 
ation until  more  prosperous  days  come  and 
then  return  to  their  undertaking.  An  invest- 
ment in  a  railroad  which  operates  in  many 
States  is  subject  to  the  regulation  of  its  busi- 
ness by  many  governments.  Its  owners  owe 
the  duty  to  the  governments  and  to  the  public 
to  operate  their  railroad  continually  in  days 
when  its  operation  is  unprofitable  as  well  as 
when  it  is  remunerative,  a  duty  they  must  dis- 
charge under  the  penalty  of  the  forfeiture  of 
their  property,  if  they  fail.  In  view  of  these 
facts,  they  ought  to  be  permitted  to  receive  a 
return  large  enough  to  enable  them  to  accumu- 
late in  prosperous  days  a  surplus  sufiicient  to 
enable  them  to  protect  their  property  in  days 
of  disaster  and  to  make  their  average  return 

59 


THE  TRUTH  ABOUT  THE  RAILROADS 

through  days  of  prosperity  and  of  adversity 
fair  and  just.  The  lands  in  Minnesota  through 
which  these  railroads  extend  are  fertile  and 
productive.  The  cities,  villages,  and  towns 
they  reach  are  rapidly  increasing  in  popula- 
tion and  wealth,  and  the  people  they  serve  are 
thriving  and  successful.  The  evidence  satisfies 
that  the  railroads  are  maintained  in  excellent 
condition,  that  they  are  efficiently  and  on  the 
whole  economically  managed  and  operated, 
and  are  rendering  commendable  service.  Jus- 
tice to  the  thriving  people  they  serve  does  not 
require  that  the  owners  of  these  railroad 
properties  should  be  deprived  of  a  fair  return 
upon  their  values.  To  deprive  them  of  such  a 
return  would  prevent  advances  and  tend  to 
compel  reductions  in  the  wages  and  salaries  of 
their  employees,  would  tend  to  prevent  the 
extension  of  their  lines  into  portions  of  the 
State  where  the  development  and  accommoda- 
tion that  railroad  service  assures  would  be 
welcome  and  may  be  needed,  to  deteriorate 
the  character  of  the  service  they  render,  and 
to  retard  the  general  prosperity.  The  legal  rate 

60 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

of  interest  on  a  debt  in  Minnesota,  in  the  ab- 
sence of  contract,  is  6  per  cent,  and  by  contract 
it  may  be  lo  per  cent  per  annum.  (Rev.  Laws 
Minn.  1905,  *2733.)  Rational  investments  in 
agricultural,  manufacturing,  mercantile,  and 
other  industrial  pursuits  and  even  well  secured 
loans  yield  returns  in  Minnesota  correspond- 
ing with  these  lawful  rates.  Investments  in 
railroads  and  the  returns  thereon  are  at  the 
risk  of  failures  and  partial  failures  of  crops,  of 
the  disasters,  delays,  and  expenses  of  unusual 
storms,  snow,  and  cold,  of  the  great  financial 
disasters  which  occasionally  prevent  or  delay 
the  movement  of  traffic,  and  of  the  burden  of 
continuous  operation,  whether  profitable  or 
unremunerative.  It  is  an  axiom  in  economics 
that  the  greater  the  risk  the  greater  must  the 
return  be  upon  invested  capital,  and  the  con- 
clusion is  irresistible  that  a  net  return  of  7  per 
cent  per  annum  upon  the  respective  values  of 
the  properties  of  these  companies  in  Minnesota 
devoted  to  transportation  is  not  more  than  the 
fair  return  to  which  they  are  entitled  under  the 
Constitution  of  the  United  States." 

61 


THE  TRUTH  ABOUT  THE  RAILROADS 

Manufacturers  need  a  constantly  growing 
market  for  their  products,  and  there  are  large 
areas  in  the  United  States  capable  of  support- 
ing a  much  greater  population  than  they  have 
at  present,  if  agriculture  and  transportation 
both  succeed. 

The  Northern  Pacific  States,  for  example, 
have  areas  and  population  as  follows :  — 

Square  miles  Population 

Wisconsin 56,040  2,333,860 

Minnesota 83,365  2,075,708 

North  Dakota 70,795  577,os6 

Montana 146,080  376,053 

Idaho 84,800  325,594 

Washington 69,180  1,141,990 

Oregon 96,030  672,765 

Total 606,290  7,503,026 

These  seven  States  are  nearly  six  and  one  half 
times  as  large  as  New  York  (49,170)  and 
Pennsylvania  (45,215)  together,  with  their 
94,385  square  miles.  They  have  a  population 
of  7,503,026,  as  compared  with  7,665,111  in 
Pennsylvania  and  9,113,279  in  New  York. 
They  produced  in  1909  a  total  of  265,712,000 
bushels  of  wheat,  or  35  per  cent  of  the  crop  of 
the  United  States,  and  received  ^247,617,000, 

62 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

a  sum  which  represents  very  large  buying 
power.  In  some  of  these  States  there  are  regions 
which  cannot  be  developed  properly  without 
more  transportation.  In  eastern  Montana, 
either  Ad^aine  (33,040  square  miles)  or  Indiana 
(36,350  square  miles)  could  be  placed  where 
no  railroad  would  touch  it.  In  central  Oregon 
the  Northern  Pacific,  Great  Northern,  and 
Union  Pacific  are  building  some  railroads, 
opening  a  part  of  the  State  in  which,  until  this 
recent  construction,  the  great  State  of  Ohio 
(41,106  square  miles)  could  have  been  placed 
where  not  a  railroad  would  touch  it.  This  area 
would  hold  the  great  State  of  New  York  with 
Rhode  Island  and  the  District  of  Columbia 
thrown  in  for  good  measure. 

The  cost  of  transportation  in  central  Oregon 
has  been  very  high  because  of  the  lack  of  rail- 
roads. On  a  ranch  last  summer,  corn  was 
needed  and  the  freight  charge  by  wagon  for 
100  miles  was  $20  per  ton,  20  cents  per  ton 
per  mile,  while  the  average  rail  rate  in  the 
United  States  in  1909  was  7.63  mills  per  ton- 
mile.    Corn  is  taken  by  railroad  from  the 

63 


THE  TRUTH  ABOUT  THE  RAILROADS 

Mississippi  River  to  New  York,  1200  miles,  for 
^3.20  per  ton. 

The  value  of  farm  property  in  Ohio,  Illinois, 
and  Wisconsin  increased  in  the  last  ten  years 
83  per  cent;  in  Iowa,  South  Dakota,  Nebraska, 
and  Kansas,  165  per  cent;  in  Minnesota, North 
Dakota,  Montana,  Idaho,  Washington,  and 
Oregon,  197  per  cent.  The  increase  in  the  value 
of  farm  property  in  all  the  States  named  has 
been  from  ^7,640,940,000  in  1900  to  ^17,762,- 
401,000  in  1910,  or  more  than  ^10,000,000,000, 
—  at  the  enormous  rate  of  ^1,000,000,000  per 
year.  Without  the  rail  transportation  furnished 
by  the  American  railroad-owner  this  great 
increase  in  national  wealth  would  have  been 
impossible.  In  1880  the  capital  employed  in 
manufacturing  in  this  country  was  ^2,790,- 
272,606,  and  in  1905  it  was  ^13,872,035,371,  — 
an  increase  in  twenty-five  years  of  ^11,000,- 
000,000  or  ^440,000,000  a  year.  Without 
the  work  of  the  railroad-owner  in  creating  the 
transportation  machine  that  has  enabled  the 
country  to  expand  its  population,  with  a  result- 
ing increase  in  farm  values  of  $1,000,000,000 
64 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

per  year,  it  would  have  been  utterly  impos- 
sible to  have  increased  the  value  of  the  man- 
ufacturing business  ^440,000,000  a  year,  and 
to  have  found  a  market  for  the  products, 
which  increased  from  ^5,369,579,191  in  1880  to 
^16,866,706,985  in  1905. 

It  may  be  urged  that  a  development  of 
waterways  would  provide  needed  transporta- 
tion. The  waterways,  if  very  highly  devel- 
oped, would  furnish  a  limited  amount  of 
transportation  for  narrow  strips  of  country 
adjacent  thereto,  but  trade  could  not  be  car- 
ried to  any  extent  for  more  than  a  few  miles 
away  from  the  water.  Climate  in  many  parts 
of  the  country  would  close  the  waterways  for 
a  considerable  period  of  the  year.  The  rail- 
roads do  not  object  to  intelligent  and  eco- 
nomical use  of  waterways  under  the  same  con- 
ditions as  govern  the  ownership  and  operation 
of  railroads. 

The  American  railroad-owners  and  man- 
agers have  done  a  great  work  in  creating  the 
great  transportation  machine  as  it  exists 
to-day,  and  they  can  progress  still  further  and 

65 


THE  TRUTH  ABOUT  THE  RAILROADS 

do  better  work  if  not  too  much  hampered  and 
discouraged.  The  railroad-owner,  by  his  cour- 
age, energy,  and  intelligence  in  adopting 
advanced  methods,  has  been  able  to  improve 
the  railroad  system  of  the  United  States 
steadily  in  the  last  forty  years  and  still  main- 
tain and  operate  his  property  in  spite  of  the 
reduction  in  rates.  If  the  railroad-user  had 
paid  in  1910  the  same  average  freight  rate  as 
in  1870,  he  would  have  paid  ^3,092,662,300 
more  than  he  did  pay;  if  he  had  paid  the  same 
average  rate  per  passenger-mile  in  19 10  as  in 
1888,  the  additional  payment  would  have  been 
^163,023,000,  the  two  amounts  being  ^837,- 
007,762  greater  than  the  entire  earnings  of  all 
the  railroads  in  the  United  States  in  1909. 

The  individual  citizen  who  by  his  voice  and 
vote  makes  or  permits  to  be  made  the  drastic 
laws  now  applicable  to  the  railroads  must 
remember  that  the  railroads  must  either  earn 
or  borrow  the  money  needed  to  improve  the 
existing  roads  and  to  build  new  ones,  if  ade- 
quate service  is  to  be  given.  In  the  face,  how- 
ever, of  constantly  increasing  wages  and  taxes 

66 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

and  of  stationary  or  falling  rates,  the  task  of 
furnishing  the  efficient  transportation  the 
American  people  must  have  is  becoming  more 
and  more  difficult. 

The  individual  has  invested  money  in  rail- 
roads in  the  past  for  the  same  reason  that  he 
has  invested  in  other  business,  —  with  the 
hope  of  profit,  —  and  there  have  been  great 
losses  to  thousands  of  people  because  their 
investments  turned  out  badly.  Take  away 
the  hope  of  profit  and  the  individual  will  not 
take  the  risk  of  loss.  In  five  years,  1904-1908, 
the  investor  has  taken  up  railroad  securities 
amounting  to  ^4,167,554,569,  or  an  average  of 
^833,510,914  per  year.  The  growth  of  this 
country  should  be  so  great  that  a  like  sum  or 
more  will  be  needed  annually  for  a  number  of 
years  if  transportation  is  furnished  in  sufficient 
quantity.  If  individuals  do  not  furnish  the 
money,  who  will.''  Enlightened  self-interest 
should  persuade  business  men  to  see  to  it  that 
investment  in  railroads  is  made  attractive 
enough  so  that  money  will  seek  them  freely. 

"The  laborer  is  worthy  of  his  hire,"  and  the 
67 


THE  TRUTH  ABOUT  THE  RAILROADS 

American  people  must  permit  the  railroad, 
which  is  doing  such  a  great  work,  to  receive 
compensation  sufficient  to  pay  good  wages, 
its  share  of  the  taxes,  a  fair  return  on  the  value 
of  the  property,  a  reasonable  profit,  and  some- 
thing to  be  used  each  year  for  necessary 
improvements  and  betterments.  Publicity  of 
corporation  affairs  and  reasonable  regulation 
of  the  great  business  institutions  of  the  coun- 
try are  desirable,  but  attempting  to  manage 
in  detail  such  concerns,  and  continual  and 
foolish  interference  with  the  judgment  of  the 
men  trained  in  that  management,  are  unwise 
and  un-American.  Such  policy  tends  to  cripple 
the  splendid  initiative  that  has  accomplished 
so  much  up  to  the  present  time.  With  that 
initiative  unimpaired  and  encouraged  to  act, 
far  better  results  will  be  accomplished  for  the 
whole  country  than  under  the  management  of 
the  Government.  Putting  a  government  uni- 
form on  a  railroad  employee  does  not  make 
him  energetic  or  infallible,  and  it  will  reduce 
his  feeling  of  responsibility. 

While  the  attacks  on  the  railroads  have  not 
68 


INDIVIDUAL,  RAILROAD,  GOVERNMENT 

ceased,  similar  action  is  now  being  considered 
and  taken  against  many  other  forms  of  busi- 
ness, and  unless  individuals  arouse  themselves 
and  take  some  active  part  in  trying  to  create 
a  sane,  unprejudiced  public  opinion  about 
business,  the  troubles  that  are  now  confront- 
ing the  owners  and  managers  of  railroads  will 
spread  and  confront  the  owners  and  managers 
of  many  other  kinds  of  property. 

The  railroads  can  exist  without  expansion, 
and  under  the  protection  of  the  Constitution 
and  the  courts  their  property  will  be  allowed 
to  earn  some  return;  but  if  they  do  not  expand 
and  improve,  it  will  be  general  business  that 
will  suffer  in  the  long  run.  Business  men  are 
neglecting  their  own  interests  when  they 
encourage  or  permit  a  governmental  policy 
which  tends  to  discourage  investment  in  and 
improvement  of  railroads,  for  without  the 
very  best  railroads  business  of  all  kinds  can- 
not achieve  its  highest  development. 


Ill 

THE  CONSERVATION  OF   RAILWAY  SERVICE » 

It  is  a  hopeful  sign  that  our  people  have 
realized  the  necessity  for  the  conservation  of 
the  resources  of  the  country.  We  have  realized, 
and  in  parts  of  the  country  realized  too  late, 
that  our  timber-supply  is  not  inexhaustible. 
The  lack  of  conservation  of  the  soil  in  the 
South  vi^as  indirectly  one  of  the  causes  bring- 
ing on  the  Civil  War,  and  the  proper  conser- 
vation of  the  soil  is  one  of  the  great  questions 
before  the  country  to-day.  Year  after  year  the 
necessity  of  stopping  waste  in  the  mining  of 
coal  has  been  pointed  out,  and  now  the  coun- 
try is  paying  attention  to  the  care  of  its  water- 
power;  at  the  same  time  we  are  told  that  there 
is  a  limit  to  the  amount  of  iron  ore  that  can 
be  reclaimed. 

In  naming  the  soil,  timber,  coal,  ore,  and 

*  Address  delivered  at  the  Second  Minnesota  Conserva- 
tion and  Agricultural  Development  Congress,  Minneapolis, 
Minn.,  November  20,  191 2. 

70 


CONSERVATION  OF  RAILWAY  SERVICE 

power,  we  name  the  chief  sources  from  which 
come  nearly  everything  that  enters  into  indus- 
try and  commerce.  Proper  conservation  of 
these  great  sources  of  supply  necessarily 
means  conservation  of  the  various  compli- 
cated processes  of  industry  and  commerce. 
Interwoven  with  these  is  a  service  to  which, 
so  far  as  I  know,  the  term  conservation  has 
never  been  applied,  and  to  the  conservation  of 
which  the  people  of  this  country  are  giving 
scant  attention.  Yet  without  that  service  our 
soil,  timber,  coal,  and  ore  would  be  of  little 
use.  The  impairment  of  that  service  means 
that  the  benefit  to  be  derived  from  the  con- 
servation of  soil,  timber,  coal,  and  ore  will 
be  lost.  This  service  is  that  of  transportation, 
and  In  the  United  States  that  service  is  per- 
formed chiefly  by  the  railways,  because  in 
their  marvelous  development  they  have  shown 
a  greater  ability  to  perform  it  economically 
than  has  any  other  agency. 

To  conserve,  as  defined  by  the  Standard 
Dictionary,  means  "to  keep  from  loss,  decay, 
or  injury;  especially,  to  preserve  in  its  existing 
71 


THE  TRUTH  ABOUT  THE  RAILROADS 

state,  from  change  or  destruction."  We  do 
not,  of  course,  desire  to  keep  our  ore  and  coal 
in  their  existing  state,  because  they  must  be 
used,  but  this  does  not  mean  that  coal  deposits 
and  ore  deposits  should  be  exploited  in  excess 
of  need,  nor  that  the  processes  of  mining 
should  be  wasteful.  With  proper  care,  soil 
and  timber  can  be  so  conserved  that  neither 
the  farm  nor  the  forest  will  be  destroyed.  The 
conservation  of  such  resources  as  these  is  not 
my  subject,  and  the  attention  of  the  country  is 
well  aroused  to  the  importance  of  proper  care 
of  these  great  primary  sources  of  prosperity. 

To  all  the  processes  of  industry  and  com- 
merce, the  service  of  transportation  is  essen- 
tial, and  it  is  a  plain  duty  of  the  people  of  this 
country  to  keep  the  railways  from  "loss,  decay, 
or  injury,"  and  to  preserve  them  from  destruc- 
tion. This  duty  falls  first  upon  those  charged 
directly  with  the  ownership,  administration, 
and  management  of  the  railways,  and  in  these 
recent  years  of  rising  expenses  and  taxes  they 
have  been  obliged  to  skimp  at  every  corner  in 
order  to  make  both  ends  meet,  while  at  the 

72 


CONSERVATION  OF  RAILWAY  SERVICE 

same  time  the  rate  of  interest  on  new  capital 
has  gone  up,  and  federal  and  state  commissions 
have  reduced  rates.  The  people  are  beginning 
to  realize  the  fact  that  railroad-owners  and 
managers  need  help. 

The  following  figures,  covering  all  the  rail- 
roads in  the  United  States,  taken  from  reports 
filed  with  the  Interstate  Commerce  Commis- 
sion for  a  term  of  years,  are  interesting:  — 


COMPARISON  OF  RESULTS   FROM  REPORTS   TO  INTERSTATE 
COMMERCE  COMMISSION 


Average  miles 

operated 

Total  operating 

revenue 

Total  operating 

expenses 

Net  operating 

revenue 

Net  revenue 

from  outside 

operations  . . . 

Taxes 

Net  operating 

income 


1906-7 

1909-10 

1910-11 

227,454 

230,052 

243.229 

$2,589,105,000 

$2,787,266,136 

$2,818,780,398 

1.748,515.000 

1,847,150,773 

i,93S.S".58i 

840,590,000 

940,076,363 

883,268,817 

2,684,892 
104,144,076 

2.072,538 
103,108,490 

80,312,000 

760,278,000 

838,617,180 

776,232,865 

246,511 

$2,873,279,985 

1,990,061,981 

882,218,004 


I.243.3I9 

121,797,743 


762,663,579 


For  the  year  ending  June  30,  19 12,  on  246,- 
511  miles  of  railway  the  owners  of  the  property 
received  only  two  and  one  half  million  dollars 
73 


THE  TRUTH  ABOUT  THE  RAILROADS 

more  Income  than  they  did  for  the  year  ending 
June  30,  1907,  on  nearly  20,ocx)  less  miles  of 
railroad.  On  a  per-mile  basis,  the  comparison 
is  even  more  striking.  The  net  operating 
income  per  mile  of  road  after  paying  taxes 
was:  — 

For  the  year  ending  June  30,  1907 ^3)342 

For  the  year  ending  June  30,  1910 3.So8 

For  the  year  ending  June  30,  1911 3, 188 

For  the  year  ending  June  30,  1912 3>094 

and  in  the  mean  time  the  owners  have  put 
millions  upon  millions  into  improvements  on 
existing  roads,  in  addition  to  creating  nearly 
20,000  miles  of  new  road.  It  is  well,  therefore, 
to  bear  in  mind  that  in  the  railway  business 
large  increases  in  amount  of  property  and  in 
gross  earnings  do  not  necessarily  mean  in- 
creases in  net  earnings. 

But  the  public  may  say  that  seven  hundred 
and  sixty  millions  of  dollars  is  a  staggering  sum 
for  the  owners  of  railway  property  to  receive, 
and  that  they  are  well  paid.  In  the  report  of 
the  Railway  Securities  Commission  appointed 
by  Mr.  Taft,  which  made  a  most  exhaustive 
examination  of  the  whole  subject  of  railway 
74 


CONSERVATION  OF  RAILWAY  SERVICE 

capitalization  and  the  returns'thereon,  occurs 
the  following  paragraph :  — 

"Neither  the  rate  of  return  actually  received 
on  the  par  value  of  American  railroad  bonds 
and  stocks  to-day,  nor  the  security  which  can 
be  offered  for  additional  railroad  investments 
in  the  future  will  make  it  easy  to  raise  the 
needed  amount  of  capital.  The  ratio  of  inter- 
est and  dividends  to  outstanding  bonds  and 
stocks  of  American  railroads  is  not  quite  4I 
per  cent.  In  each  case  the  average  ratio  of 
dividends  to  the  capital  of  national  banks  Is 
between  10  and  1 1  per  cent.  There  is  a  wide- 
spread belief  based  on  imperfect  examination 
of  the  evidence  that  the  amount  of  capital 
needed  for  the  future  development  of  our  rail- 
road system  is  small  in  proportion  to  that 
which  has  been  required  In  the  past;  that  the 
profits  on  such  added  investments  of  capital 
are  reasonably  well  insured,  and  that  we  can 
therefore  fix  attention  predominantly  If  not 
exclusively  on  the  needs  of  the  shipper  without 
interfering  with  the  necessary  supply  of  new 
money  from  the  Investors." 

75 


THE  TRUTH  ABOUT  THE  RAILROADS 

In  answer  to  this  the  public  may  say  that 
the  low  return  of  4^  per  cent  is  applied  to  a 
capitalization  that  is  unfair.  Valuations  of 
railway  property  have  been  made  in  a  number 
of  States  by  public  authorities,  with  the  result 
that  in  the  States  of  Washington,  South 
Dakota,  Michigan,  Minnesota,  and  Wisconsin 
the  figures  for  the  value  of  the  railway  prop- 
erty were  ^1,211,806,522  as  compared  with 
the  aggregate  gross  capitalization  of  ^1,210,- 
999,033.  In  Minnesota  the  State  made  a 
valuation  of  the  property  of  the  Northern 
Pacific,  Great  Northern,  and  Minneapolis  & 
St.  Louis  roads  of  $193,094,302,  while  the 
capitalization  for  the  three  roads  in  Minnesota 
was  $155,051,909.  Here  are  a  few  cases  where 
governmental  authority  has  made  a  valuation 
of  the  railroads,  and  in  every  case  the  value 
is  more  than  the  capitalization.  Taking  the 
country  as  a  whole,  there  is  no  doubt  but  that 
the  railroad  properties  to-day  as  going  con- 
cerns are  worth  more  than  the  par  value  of  the 
capital  standing  in  the  hands  of  the  public. 

In  all  business  transactions  there  are  at 
76 


CONSERVATION  OF  RAILWAY  SEEVICE 

least  two  parties,  and  If  business  is  to  succeed, 
there  must  be  cooperation,  fairness,  and  jus- 
tice from  each  to  the  other.  In  the  current 
talk  of  the  day  there  are  the  Government  and 
the  railways,  the  people  and  the  railways,  the 
employees  and  the  railways,  and  the  shippers 
and  the  railways.  And  the  railways,  in  a  way, 
are  under  lire  from  the  four  great  forces,  the 
Government,  the  people,  the  employees,  and 
the  shippers. 

Without  attempting  a  long  discussion  over 
old  contentions,  or  looking  back  to  what  the 
people  ought  to  have  done  or  what  the  rail- 
ways ought  not  to  have  done  in  the  past,  I 
want  to  call  your  attention  to  some  things  in 
which  the  people,  who  need  and  use  the  rail- 
ways, for  whose  service  the  railways  are  cre- 
ated, and  who  regulate  the  railways,  can,  with 
fairness  and  justice  to  themselves,  be  of  assist- 
ance in  conserving  railway  service  for  the 
common  good. 

The  most  Important  service  performed  by 
the  railways  is  the  transportation  of  freight. 
Not  everybody  has  to  travel,  but  everybody 

77 


THE  TRUTH  ABOUT  THE  RAILROADS 

must  have  food,  clothing,  shelter,  and  fuel, 
and  nearly  all  of  the  food,  clothing,  shelter, 
and  fuel  of  the  people  of  this  country  is  carried 
all  or  part  of  the  way  from  producer  to  con- 
sumer in  freight-cars.  The  use  that  the  rail- 
ways make  of  their  cars  is,  therefore,  of  the 
utmost  importance,  not  only  to  the  railways 
but  to  the  people.  When  a  freight-car  is 
standing  still,  it  is  doing  no  good  to  the  rail- 
way or  to  the  people,  but  the  railways  have 
had  to  pay  for  that  car,  and  a  part  of  their 
capital  is  invested  in  it.  When  it  is  standing 
ptill,  it  is  not  earning  anything  on  that  capital, 
and  as  the  capital  of  the  railways  is  a  part  of 
the  national  wealth,  the  usefulness  of  the 
national  wealth  is  impaired  by  the  loss  in- 
curred through  the  idleness  of  the  car.  When 
a  freight-car  is  waiting  to  be  loaded  by  a 
shipper,  or  when  it  is  waiting  to  be  unloaded 
by  a  consignee,  that  car  is  not  in  the  service  of 
the  people,  whose  demand  for  transportation 
is  now  in  excess  of  the  capacity  of  the  railways 
to  supply. 

It  would  be  a  very  happy  condition  if  the 
78 


CONSERVATION  OF  RAILWAY  SERVICE 

railways  always  had  enough  cars,  so  that  they 
could  supply  every  shipper  with  an  empty  car 
whenever  he  wanted  it  and  just  as  soon  as  he 
wanted  it.  They  have  not  enough  cars  to 
meet  this  requirement  at  times  of  the  heaviest 
business  in  the  country,  and  it  is  not  their  fault 
that  they  have  not.  In  fact,  it  would  be  an 
economic  waste,  taking  the  country  as  a  whole, 
to  have  enough  cars  for  the  very  highest 
amount  of  business;  this  would  mean  that 
many  cars  would  be  idle  for  several  months 
of  the  year.  There  would  be  too  much  idle 
capital  in  such  a  plan. 

On  December  31, 191 1,  there  were  2,160,408 
freight-cars  in  the  United  States.  At  ^800  a 
car  this  means  a  capital  investment  of  ^1,728,- 
326,400.  If  this  large  amount  of  capital  is  not 
used  steadily  and  economically,  there  is  direct 
loss  to  the  business  of  the  country.  But  remem- 
ber that  the  very  livelihood  of  a  railway  com- 
pany depends  upon  its  obtaining  the  utmost 
possible  service  from  its  freight-cars,  and  there 
is  no  phase  of  operation  to  which  a  railway- 
manager  gives  more  attention  than  to  the 

79 


THE  TRUTH  ABOUT  THE  RAILROADS 

most  effective  distribution  and  prompt  hand- 
ling of  equipment.  Every  now  and  then  there 
is  complaint  of  a  coal  famine,  and  that  there 
are  not  cars  enough  to  move  the  coal-supply. 
In  reply  to  such  complaints,  the  railways  say, 
with  some  justice,  that  if  users  of  coal  defer 
their  orders  until  cold  weather,  they  cannot 
reasonably  expect  the  railways  to  move  in  a 
few  weeks  the  coal  which  should  have  been 
shipped  during  a  period  of  months  and  stored 
in  yards  or  bins  at  various  points  of  consump- 
tion. Crowding  the  shipments  into  a  short 
period  of  time  creates  car-shortage  and  a 
congestion  on  tracks  and  in  yards. 

No  less  than  shippers  in  the  prompt  loading 
of  cars,  can  those  who  receive  freight  conserve 
railway  service,  and  therefore  the  national 
wealth,  by  promptly  unloading  shipments 
received  in  carloads,  and  by  promptly  remov- 
ing their  freight  from  the  station  sheds  when 
it  comes  in  less  than  carloads.  Carelessness 
about  this  is  one  of  the  evils  at  which  the  rail- 
ways in  former  times  connived  under  stress  of 
competition.   There  was  a  time  when  a  con- 

80 


CONSERVATION  OF  RAILWAY  SERVICE 

signee  was  allowed  to  hold  a  car  as  long  as  he 
liked.  The  retail  dealer  who  received  a  car  of 
coal  used  it  as  a  warehouse  until  little  by  little 
the  contents  were  sold.  A  factory  receiving 
carloads  of  coal,  cement,  lime,  lumber,  or  any 
other  article,  kept  the  cars  on  its  sidings  until 
the  contents  were  needed.  And  so  it  has  been 
with  dealers  in  hay  and  grain  and  fruit  and 
vegetables.  That  is,  freight-cars  were  held 
and  used  as  warehouses,  thus  preventing  the 
use  of  the  same  car  for  its  proper  purposes. 
Such  practice  is  most  wasteful,  and  demurrage 
charges  have  been  established  in  the  hope  that 
cars  would  be  released  more  promptly.  In  the 
United  States,  as  a  rule,  consignees  are  now 
allowed  forty-eight  hours  In  which  to  unload 
cars  before  any  demurrage  charge  begins.  In 
Germany,  in  times  of  increased  business, 
consignees  are  obliged  by  a  strictly  enforced 
law  to  unload  their  cars  within  six  hours. 
Notwithstanding  this  allowance  of  free  time, 
which  is  more  liberal  in  the  United  States  than 
in  any  other  country,  commercial  customs 
have  grown  up  so  that  cars  are  retained  at 

8i 


THE  TRUTH  ABOUT  THE  RAILROADS 

large  terminals,  and  even  at  country  stations, 
beyond  the  expiration  of  this  time,  being  used 
as  storage  warehouses.  This  practice  Is  expen- 
sive to  the  railways,  because  the  demurrage 
payment  does  not  begin  to  pay  for  the  idleness 
of  the  car;  and  it  is  expensive  for  the  shipping 
public,  because  it  reduces  the  carrying  capa- 
city of  the  railways  as  a  whole. 

The  owners  of  freight,  therefore,  have  a 
responsibility  for  creating  suitable  facilities 
for  loading  and  unloading  freight  promptly 
and  for  warehousing  it  In  structures  of  their 
own,  rather  than  In  railway-cars,  because  the 
railway-car  Is  the  most  expensive  warehouse 
that  can  be  used.  A  box-  or  a  coal-car  costs 
from  $700  to  ^1000,  and  a  refrigerator-car 
costs  from  ^1200  to  ^1500.  When  one  of  these 
cars  is  placed  upon  a  team-track  in  Minne- 
apolis, for  example,  so  that  hay  or  grain  or 
coal  or  fruit  or  meat  can  be  unloaded,  a  piece 
of  land  sufhclently  large  for  the  car  and  team 
must  be  occupied,  or  at  least  900  square  feet. 
This  land  Is  generally  In  a  part  of  the  city 
where  real  estate  is  valuable  and  is  worth  from 

82 


CONSERVATION  OF  RAILWAY  SERVICE 

$1  to  ^5  a  square  foot.  For  the  sake  of  exam- 
ple, say  it  is  worth  $2  a  square  foot,  making 
the  ground  worth  ^i8oo.  Here,  then,  is  an 
investment  for  car  and  land  of  from  ^2500  to 
^3300.  There  are  from  2500  to  3000  cubic  feet 
of  storage  in  a  car,  so  that  this  storage  space 
represents  a  capital  investment  of  from  ^i  to 
^1.33  a  cubic  foot.  A  good  warehouse  several 
stories  high  could  be  built,  using  the  same  land 
area  over  and  over  again,  for  very  much  less 
per  cubic  foot,  so  that  present  commercial 
customs  of  permitting  freight  to  be  warehoused 
in  cars  are  resulting  in  a  serious  economic 
waste  to  the  country  as  a  whole  as  well  as  to 
the  railroads.  Prompt  loading  and  unloading 
of  freight-cars  is  one  way  in  which  owners  of 
freight  can  conserve  railway  service  and  in  the 
long  run  help  themselves. 

The  conservation  of  railway  service  has  yet 
larger  aspects.  The  moving  of  a  freight-car 
from  the  place  of  shipment  to  its  destination  is 
the  duty  of  the  railway  company,  but  it  cannot 
perform  that  duty  without  adequate  facilities. 
These  facilities  cannot  be  obtained  unless  the 

83 


THE  TRUTH  ABOUT  THE  RAILROADS 

people  of  the  country  allow  the  railways  such 
earnings  as  will  enable  them,  not  only  to  pay 
their  expenses,  but  to  attract  the  capital 
needed  for  the  provision  of  such  facilities,  and 
for  their  extension  to  meet  the  demands  of 
our  growing  country. 

For  the  prompt  movement  of  business,  not 
only  cars  are  necessary,  but  locomotives, 
sufficient  trackage  to  move  trains  without 
delay,  and  terminal  yards  through  which  cars 
may  be  handled  promptly,  made  up  into 
trains,  and  dispatched.  It  has  not  been  many 
years  since  there  were  more  railway-tracks, 
more  cars,  and  more  locomotives  than  were 
needed,  but  now  the  situation  has  changed. 
In  this  rapidly  developing  country  five  years 
makes  a  difference,  and  ten  years  makes  a 
very  large  difference. 

Mr.  William  M.  Acworth  is  a  noted  English 
authority  on  railway  economics.  About  a  year 
ago  he  said:  "You  American  railroad  officials 
ought  to  stop  talking  about  double-tracking 
your  roads  as  if  that  were  the  end  of  the  im- 
provement.   The  time  will  come  when  you 

84 


CONSERVATION  OF  RAILWAY  SERVICE 

will  have  not  only  double  tracks,  but  you  will 
have  four,  six,  eight,  ten,  twelve  tracks.  We  are 
at  that  stage  in  England  to-day,  and  yet  the 
railroad  problem  in  England  is  nothing  com- 
pared with  the  United  States.  Here  your  dis- 
tances are  so  great,  you  have  so  far  to  move 
your  traffic  to  get  it  to  water,  that  it  will 
become  so  dense  that  you  will  wonder  why 
you  talked  about  double  tracks  at  all." 

Those  of  us  who  believe  in  the  great  growth 
of  the  United  States  realize  that  Mr.  Acworth 
has  not  overdrawn  the  picture,  and  we  realize 
how  tremendous  the  problem  is  to  get  the 
money  with  which  to  do  all  the  things  that 
should  be  done  in  the  way  of  giving  safe  and 
adequate  transportation  facilities. 

Mr.  Samuel  W.  Fairchild,  Chairman  of  the 
Committee  on  Internal  Trade  and  Improve- 
ments of  the  New  York  Chamber  of  Com- 
merce, recently  presented  a  very  luminous  re- 
port about  the  railroad  situation.  He  says :  — 

"It  is  estimated  that  it  will  require  in  the 
next  five  years,  to  maintain  railroad  facilities 
equal  to  the  enormous  traffic  of  the  country, 
85 


THE  TRUTH  ABOUT  THE  RAILROADS 

the  immense  sum  of  ^8,500,000,000.  Some 
idea  of  the  magnitude  of  this  sum  may  be  had 
from  the  fact  that  it  is  eight  times  the  national 
debt,  it  is  more  than  two  and  a  half  times  the 
amount  of  money  in  circulation,  it  is  equal  to 
all  the  deposits  in  the  national  and  state  banks, 
and  nearly  equal  to  the  entire  money  value 
of  all  the  farm  products  of  the  country  in 
one  year.  It  is  over  three  times  the  annual 
gross  revenue  of  the  railroads,  and  it  amounts 
to  nearly  one  half  of  the  existing  railway 
capital  represented  by  stocks  and  bonds.  The 
question  of  obtaining  the  ^8,500,000,000  neces- 
sary to  make  railroad  facilities  equal  to  the 
expanding  traffic  of  the  country  during  the 
next  five  years,  therefore,  constitutes  the  most 
important  problem  now  confronting  business 
men." 

I  have  already  quoted  from  the  report  of 
the  Railway  Securities  Commission,  showing 
the  low  rate  of  return  on  railway  investments. 
That  same  Commission  says:  "A  reasonable 
return  is  one  which,  under  honest  accounting 
and  responsible  management,  will  attract  the 
86 


CONSERVATION  OF  RAILWAY  SERVICE 

amount  of  investors'  money  needed  for  the 
development  of  our  railroad  facilities.  If  rates 
are  going  to  be  reduced  whenever  dividends 
exceed  current  rates  of  interest,  investors  will 
seek  other  fields  where  the  hazard  is  less  or  the 
opportunity  greater."  And  again:  "The  neces- 
sary development  of  railroad  facilities  is  now 
endangered  by  the  reluctance  of  investors  to 
purchase  new  issues  of  railroad  securities  in 
the  amounts  required.  This  reluctance  is  likely 
to  continue  until  the  American  public  under- 
stands the  essential  community  of  interest  be- 
tween shipper  and  investor  and  the  folly  of  at- 
tempting to  protect  the  one  by  taking  away  the 
rewards  of  good  management  from  the  other." 
Mr.  Fairchild,  also,  whom  I  have  previously 
quoted,  points  out  that  the  time  has  arrived 
when  there  should  be  some  support  of  the 
railroads. 

That  the  railways  have  been  falling  behind 
the  business  of  the  country  is  shown  by  statis- 
tics from  the  reports  of  the  Bureau  of  Census 
and  of  the  Interstate  Commerce  Commission. 
In  the  United  States  the  value  of  the  railways 

87 


THE  TRUTH  ABOUT  THE  RAILROADS 

increased  only  about  half  as  fast  as  the  value 
of  all  property  during  the  fifteen  years  from 
1890  to  1904.  In  1910  the  capital  value  of 
agricultural  property  throughout  the  United 
States  was  100.5  P^r  cent  greater  than  in  1900; 
the  capital  value  of  manufacturing  property 
105.3  per  cent  greater;  but  the  cost  of  road 
and  equipment  of  the  railways  was  but  40.2 
per  cent  greater.  By  capital  value  is  meant 
book  value,  and  not  capitalization.  For  the 
ten  years  ending  in  19 10  there  was  an  increase 
of  81.2  per  cent  in  the  gross  value  of  manu- 
factured products,  with  an  increase  of  105.3 
per  cent  in  manufacturing  capital.  During  the 
same  time  there  was  an  increase  of  85  per  cent 
in  the  total  operating  revenues  of  the  railways, 
accompanied  by  an  increase  of  only  40.2  per 
cent  in  the  cost  of  road  and  equipment.  This 
indicates  that  the  railways  are  exhausting  that 
margin  of  elasticity  which  they  ought  always 
to  preserve  in  order  to  meet  the  demands  of 
growing  business  like  that  of  the  present.  It  is 
to  the  interest  of  the  people  as  a  whole  that  the 
railways  be  kept  at  all  times  in  a  condition  of 


CONSERVATION  OF  RAILWAY  SERVICE 

"readiness  to  serve"  and  with  an  ability  to 
cany  the  "peak  load"  without  breakdown. 

The  percentage  of  net  return  on  the  capital 
value  of  the  manufacturing  Industry  was  over 
twice  as  great  In  1910  as  the  percentage  of  the 
net  return  on  the  cost  of  road  and  equipment 
of  the  railways.  This  disparity  between  the 
growth  in  capital  value  of  agriculture  and  the 
capital  value  of  the  railways  is  greatest  in  that 
portion  of  the  West  where  great  extension  of 
the  railways  and  an  Increase  in  their  facilities 
is  necessary  to  keep  them  equal  to  the  rapidly 
developing  business.  In  1910  In  Colorado  the 
value  of  farm  lands  and  buildings  was  284.1 
per  cent  greater  than  in  1900;  in  Idaho,  479.1 
per  cent  greater;  in  Montana,  305.7  per  cent 
greater;  in  North  Dakota,  313.9  per  cent 
greater;  in  Oregon,  244.3  per  cent  greater;  in 
South  Dakota,  356.6  per  cent  greater;  in 
Washington,  394.7  per  cent  greater;  In  Wyo- 
ming, 263.1  per  cent  greater.  Yet  In  this  time 
the  gross  capitalization  of  the  railways  In  this 
western  section  Increased  no  more  than  from 
53  per  cent  in  that  district  which  includes  the 
89 


THE  TRUTH  ABOUT  THE  RAILROADS 

Dakotas  to  87  per  cent  in  that  district  which 
includes  Wyoming  and  Montana. 

The  saying  that  you  cannot  "eat  your  cake 
and  have  it  too"  is  true  of  the  railroads  and 
the  people  to-day.  We  cannot  have  the  good 
service  and  facilities  that  we  need,  give  em- 
ployees the  increasing  wages  they  demand, 
pay  the  higher  taxes  imposed,  keep  rates 
down,  and  even  reduce  them  farther;  we  can- 
not do  all  these  things  and  still  find  investors 
who  will  furnish  money  for  increased  facilities. 

The  conservation  of  railway  service  is  a 
great  national  question;  the  owners  and  man- 
agers of  the  railways  are  doing  all  they  can, 
but  the  people  must  help.  So  while  so  much  is 
being  said  and  done  about  conservation  of 
soil,  of  forest,  of  agriculture,  of  the  boy  and 
girl,  and  of  human  life,  a  little  thought  and 
attention  should  be  given  to  the  urgent  neces- 
sity for  the  conservation  of  railway  service. 
It  must  be  protected  and  kept  "from  loss, 
decay,  or  injury."  Without  proper  conserva- 
tion of  this  great  service  which  supplements 
all  the  others,  development  will  be  checked. 
90 


CONSERVATION  OF  RAILWAY  SERVICE 

It  is  idle  to  blame  the  present  owners  and 
managers  of  the  properties  for  errors  of  the 
past;   the  present   and   the  future   are   the 
important  points  to  consider. 
The  old  nursery  rhyme  reads :  — 

"Old  Mother  Hubbard, 

Went  to  the  cupboard, 
|To  get  her  poor  dog  a  bone. 

But  when  she  got  there. 

The  cupboard  was  bare, 

And  so  the  poor  dog  got  none." 

Uncle  Sam  should  study  his  transportation 
machine  and  understand  it  better,  and  take 
steps  to  conserve  it.  If  he  does  not  he  may 
find  that  in  an  effort  to  have  cheap  transpor- 
tation he  has  not  enough  transportation,  that 
his  "cupboard  is  bare,"  and  that  it  will  take 
him  a  very  long  time  and  a  vast  amount  of 
money  to  get  it  well  equipped  again. 


IV 

RATE-MAKING  AND  THE  GOVERNMENT* 

I  THINK  all  railroad-owners  and  officers 
agreed  with  President  Roosevelt  when  he  said 
in  a  message  to  Congress:  "Above  all  else  we 
must  strive  to  keep  the  highways  of  commerce 
open  to  all  on  equal  terms;  and  to  do  this  it  is 
necessary  to  put  a  complete  stop  to  rebates. 
Whether  the  shipper  or  the  railroad  is  to 
blame,  makes  no  difference;  the  rebate  must 
be  stopped,  the  abuses  of  the  private  car,  and 
private  terminal  track,  and  side-track  systems 
must  be  stopped."  In  fact,  the  great  bulk  of 
the  freight  in  the  United  States  is  now  moving 
under  that  principle.  I  believe  that  there  is 
much  exaggeration  and  misconception  about 
the  alleged  abuses  that  exist.  There  is  no  ques- 
tion of  "railroads  versus  the  people";  there 
is  a  demand  for  the  correction  of  certain  abuses 

^  Remarks  before  the  Committee  on  Interstate  Com- 
merce, United  States  Senate,  May  20,  1905. 

92 


RATE-MAKING   AND   THE   GOVERNMENT 

and  failures  in  the  management  of  railroad 
business,  resulting,  unfortunately,  in  much 
confusion  of  ideas,  which  may  produce  results 
very  detrimental  to  the  growth  of  business  in 
this  country,  and  therefore  harmful  to  the  rail- 
roads. On  the  Northern  Pacific  road,  for  ex- 
ample, —  comprising  about  six  thousand  miles, 
—  there  are  no  rebates;  there  are  no  private- 
car  abuses;  there  are  no  side-track  abuses. 
There  are,  of  course,  differences  of  opinion 
about  the  relations  of  rates,  as  there  always; 
will  be  under  any  system.  Railroad  business, 
being  conducted  by  human  beings  who  are  no 
more  infallible  than  those  in  other  walks  of 
life,  is  not  conducted  with  absolute  perfection. 
For  the  errors  made  in  the  conduct  of  the  enor- 
mous railroad  business  of  this  country,  the 
plan  of  control  and  management  should  not 
be  condemned  and  dislocated,  any  more  than 
the  general  scheme  of  our  government  should 
be  condemned  because  there  are  frauds  in  the 
administration  of  the  Land  Office  and  the 
Post  Office  Department,  and  inefficiencies  in 
the  administration  of  the  government  in  places. 
93 


THE  TRUTH  ABOUT  THE  RAILROADS 

•  It  is  my  sincere  belief  that  a  very,  very  large 
I  proportion  of  the  transactions  made  daily 
j  between  the  railroad-owner  and  the  railroad- 
'!   user  go  on  without  friction,  without  difS.culty, 
and  without  hardship  or  injustice  to  any  one. 
Not  long  ago  I  caused  a  calculation  to  be  made 
of  the  total  number  of  individual  freight  trans- 
actions on  the  Northern  Pacific  road  in  a  year, 
y   In  round  figures  there  were  something  over 
I    3,000,000   separate   freight   transactions,   or 
I  about  9600  a  working  day.  Each  one  of  these 
transactions  involved  the  use  of  freight  tariffs, 
the  making  of  bills  of  lading  and  waybills,  the 
loading  and  transporting  of  the  freight,  the 
safe  delivery  to  the  consignee,  the  collection 
of  the  money,  and  the  issuing  of  receipts. 
During  the  same  time  there  were  claims  against 
the  railroad  for  loss  and  damage,  and  other 
errors  and  failures  connected  with  this  large 
number  of  complicated  transactions,  of  about 
one  per  cent  of  the  shipments.    Considering 
the  complexity  of  the  business  and  the  large 
number  of  employees  involved,  this  record,  I 
believe,  is  creditable  and  shows  reasonable 
94 


RATE-MAKING   AND   THE   GOVERNMENT 

stability  and  efficiency  in  conducting  the 
business.  What  is  true  on  the  Northern  Pacific 
is  doubtless  true  on  other  roads,  and  most  of 
the  transactions  between  the  shipper  and  the 
railroad  are  completed  without  any  feeling  of 
injustice,  or  that  there  is  something  radically 
wrong  with  the  American  railway  system.  The 
same  thing  is  true  to  an  even  greater  extent  in 
the  passenger  business.  Passengers  get  on  and 
off  trains  all  over  the  country  without  feeling 
that  they  have  any  complaint  against  the 
railroads  as  to  discrimination  or  injustice  in 
rates,  except  in  rare  instances. 

With  the  growing  railroad  business  of  the 
United  States,  the  distribution  of  railroad 
securities,  and  the  demand  for  manufactured 
articles  used  by  railroads,  it  is  not  unfair  to 
say  that,  counting  railroad  employees  and 
owners,  and  employees  in  industries  furnish- 
ing material  and  supplies  to  railroads,  there 
are  from  2,500,000  to  3,000,000  persons  whose 
daily  bread  and  butter  and  general  position 
in  life,  together  with  those  of  their  families, 
depend  very  largely  upon  the  railroad  busi- 

95 


THE  TRUTH  ABOUT  THE  RAILROADS 

ness  and  its  development  along  wholesome 
lines.  Multiply  this  number  by  four  and  we 
have  10,000,000  to  12,000,000  persons,  or  from 
one  eighth  to  one  seventh  of  the  population 
of  the  United  States,  who  either  fail  to  realize 
the  importance  of  the  policy  under  discussion, 
or  who,  if  they  do  realize  it,  are  generally  silent 
through  lack  of  opportunity  or  ability  to  make 
any  statement  in  their  own  behalf. 
\  Most  of  these  people  are  attending  quietly 
to  their  duties  on  the  railroad,  in  the  factory, 
or  in  their  homes,  and  they  form  a  very  im- 
portant part  of  the  population  of  this  country. 
Ultimately,  any  step  under  which  the  Federal 
Government  exercises  the  power  of  fixing  the 
actual  rate  to  be  charged  by  railroads  will 
affect  them  adversely  by  introducing  an 
economic  force  into  their  scheme  of  life  which 
will  mean  repression  and  curtailment  of  the 
chance  of  success  due  to  hard  individual  effort. 
In  the  clamor  for  fixing  railroad  rates,  much 
of  which  comes  from  those  who  want  some 
personal  advantage,  either  political  or  com- 
mercial,  from   those   who   hope   to   obtain 

96 


RATE-MAKING   AND    THE    GOVERNMENT 

through  governmental  aid  success  which  they 
have  not  obtained  by  their  own  energy  and 
ability,  and  from  those  who  believe  in  social- 
ism, the  rights  of  this  large  number  of  people 
should  not  be  lost  sight  of,  and  they  should 
not  have  imposed  upon  them  governmental 
conditions  that  do  not  obtain  in  other  forms  of 
commercial  and  business  life  in  this  country. 
When  this  large  class  of  people  come  to  under- 
stand fully  what  is  contemplated,  their  voice 
will  be  heard  most  plainly  against  the  social- 
istic plan  now  proposed. 

The  newspapers  comment  more  or  less  upon 
the  fact  that  great  fortunes  have  been  made 
out  of  the  railroad  business,  and  name  a  small 
number  of  individuals  who,  through  superior 
ability,  energy,  foresight,  and  hard  work,  have 
built  up  large  fortunes.  From  the  constant 
discussion  of  this  subject  by  the  daily  press, 
there  is  a  more  or  less  prevalent  opinion  that 
the  railroad  business  furnishes  a  field  for  the 
rapid  accumulation  of  money,  and,  to  a  cer- 
tain extent,  that  this  money  comes  unjustly 
from  the  public.    It  is  true  that  a  few  large 

97 


THE  TRUTH  ABOUT  THE  RAILROADS 

fortunes  have  been  made  in  the  railroad  busi- 
ness, but  no  more  than  in  the  iron,  coal,  lum- 
ber, and  manufacturing  businesses,  if  as  much. 
They  are  the  capital  prizes  in  the  lottery  of 
life  that  are  open  to  every  ambitious  American. 
But  of  the  great  army  of  railroad-owners, 
officers,  and  employees,  a  very  small  propor- 
tion obtain  more  than  enough  for  their  daily 
living,  whatever  their  position  in  society  may 
be,  and  some  saving  for  old  age  and  their  chil- 
dren outside  of  that. 

As  a  rule,  the  railroad  officer  or  employee  is 
as  conscientious,  high-minded,  and  devoted  to 
the  interest  that  employs  him  as  any  man  in 
any  other  walk  of  life,  and  he  appreciates  that 
the  best  interests  of  his  employer  are  served 
by  building  up  the  tributary  country,  which 
can  be  done  only  by  adjusting  rates  and  giving 
service  that  will  develop  the  natural  resources. 
He  is  also  fair-minded  and  anxious  to  be  fair 
and  square  with  the  user  of  the  railroad,  as 
well  as  with  the  company,  because  he  realizes 
that  the  greatest  success  to  the  company 
comes  from  fair  treatment  to  the  patron;  in 
98 


RATE-MAKING   AND   THE   GOVERNMENT 

other  words,  a  daily  application  of  the  "square 
deal." 

Take  them  as  a  class,  moreover,  the  income 
received  by  the  railroad  officer  and  employee 
is  no  greater  than  that  received  by  those  inter- 
ested or  engaged  in  other  business  pursuits 
in  the  United  States  requiring  the  same  ability 
and  experience;  and  in  the  case  of  the  railroad- 
owner,  it  is  less. 

We  hear  the  expressions  "railroad  problem" 
and  "railroad  question"  very  often.  There  is 
nothing  mysterious  or  unusual  about  the  rail- 
road business,  and  the  problems  and  questions 
surrounding  it  are  the  same  as  those  affecting 
other  commercial  business.  In  considering  the 
railroad  business,  however,  the  fact  should  not 
be  lost  sight  of  that  the  business  of  building, 
managing,  and  operating  railroadsis  compara- 
tively new.  Only  within  the  last  thirty  years 
has  it  assumed  the  great  importance  and  pro- 
portions that  it  now  has.  The  work  done 
by  the  American  investor,  railroad-builder, 
owner,  and  manager  in  the  last  thirty  years 
has  been  enormous  in  producing  the  present 
99 


THE  TRUTH  ABOUT  THE  RAILROADS 

railroad  system  of  the  country,  —  a  system 
which,  on  the  whole,  is  one  of  the  most  won- 
derful things  ever  produced  by  human  energy. 
The  performing  of  all  this  work  has  required 
many  men,  much  money,  making  of  great  mis- 
takes, wasting  of  money  before  obtaining  the 
present  roads,  learning  by  experience,  training 
of  men  to  administer  the  business,  evolution  of 
methods;  and  the  wonder  is,  not  that  there 
are  some  abuses  and  failures  in  the  conduct  of 
the  business,  but  that  there  are  not  more. 
The  railroads  of  the  United  States  are  to- 

< 

day  in  an  unfinished  condition,  and  need  to 
attract  capital,  administrative  talent,  and  the 
wage-earner.  The  country  wants,  in  the  rail- 
roads, the  same  things  that  are  being  furnished 
in  older  and  smaller  countries  like  England, 
France,  and  Germany;  that  is  to.say*. iictter 
road,  track,  and  bridges,  faster  trains,  greater 
safetj^more  beautiful  station  facilities,  all 
of  which  means  an  enormous  investm.ent  of 
capital  and  a  considerable  period  of  time,  the 
training  of  many  men,  and  the  least  interfer- 
ence possible  with  the  development  of  the 

100 


RATE-MAKING   AND   THE   GOVERNMENT 

business.  Hamper  the  railroads  by  too  much 
restrictive  legislation  and  take  away  from  the 
man  who  has  to  provide  the  money  for  these 
expanded  facilities  the  naming  of  the  price  to 
be  charged  for  the  use  of  these  facilities,  and 
this  expansion  will  gradually  be  stopped.  "You 
can  lead  a  horse  to  water,  but  you  cannot 
make  him  drink."  You  can  give  to  a  branch 
of  the  Federal  Government  the  power  to  fix 
an  actual  rate  which  the  owner  of  property 
shall  receive  for  the  use  of  his  property,  but 
you  cannot  make  the  owner  of  the  property 
improve  his  railroad,  buy  more  cars,  build 
more  branch  railroads,  and  expand  his  business. 
That  the  abuses  connected  with  the  railroad 
business,  small  in  number  as  I  believe  them  to 
be  when  compared  with  the  total  volume  of 
trade,  are  not  affecting  materially  the  general 
growth  of  business  in  the  United  States  is 
evidenced  by  the  fact  that  everywhere  you  go 
in  this  country,  from  the  Atlantic  to  the 
Pacific,  you  see  thriving  towns  and  cities, 
expanding  agricultural  productions,  demand 
for  lands,  growing  values  of  lands,  increasing 

lOI 


THE  TRUTH  ABOUT  THE  RAILROADS 

manufacturing  capacity,  increasing  ownership 
of  homes,  well  employed  labor,  demand  for 
more  and  better  transportation,  and  a  chance 
for  the  conscientious,  sober,  and  industrious 
man  to  improve  his  standing,  no  matter  what 
business  he  may  enter. 

I  If  railroad  rates,  as  a  whole,  were  unjust, 
/unreasonable,  wrongly  discriminatory,  as  be- 
tween individuals  and  localities,  this  condition 
would  not  exist.  It  has  been  held  that  the 
power  to  fix  a  railroad  rate  should  be  lodged 
with  some  other  authority  than  with  the 
railroad-owner,  because  railroad  transportation 
enters  into  the  life  of  the  people  in  every  way, 
and,  therefore,  the  railroad-owner  should  not 
fix  that  price.  Is  it  not  also  true  that  the  price 
of  producing  power  enters  into  the  life  of  the 
people  in  every  way.''  The  price  of  a  pair  of 
shoes,  of  a  coat,  or  of  any  manufactured  article, 
depends  in  part  upon  the  cost  of  the  power 
used  to  run  the  machinery  that  made  the 
articles  in  question.  If  the  final  decision  to  fix 
the  actual  rate  to  be  charged  by  the  railroad 
is  to  be  given  to  some  branch  of  the  Federal 

102 


RATE-MAKING   AND   THE   GOVERNMENT 

Government  because  a  railroad  rate  enters  into 
every  one's  life,  it  is  only  a  short  step  to  say 
that  the  final  decision  as  to  the  price  of  coal,  or 
water-power,  or  of  any  other  agency  produc- 
ing power  should  be  fixed  by  some  govern- 
mental authority.  Again,  the  price  of  labor 
enters  into  the  cost  of  living  of  every  one,  and 
to  a  greater  extent  than  the  price  of  railroad 
transportation  or  the  price  of  power,  because 
the  price  of  labor  is  the  largest  single  item  of 
expense  to  the  railroad  and  to  the  coal-mine. 
If  it  is  wise  for  the  Federal  Government  to  fix 
the  price  of  railroad  transportation  because  of 
its  affecting  every  one  in  the  nation,  why  is  it 
not  equally  wise  to  fix  the  price  of  coal,  of 
electricity,  and  of  labor?  And  where  are  you 
going  to  stop  ? 

One  argument  advanced  for  changing  the 
present  federal  laws  about  rates  is  that  there 
has  been  during  the  last  few  years  a  gradual 
elimination  of  competition,  and  there  is  a  fear 
that  rates  will  be  so  controlled  that  they  will 
not  fall  gradually,  or  that  they  will  be  ad- 
vanced arbitrarily. 

103 


THE  TRUTH  ABOUT  THE  RAILROADS 

That  there  has  been  some  elimination  of 
certain  kinds  of  competition  is  no  doubt  true. 
It  has  resulted,  however,  very  largely  from  the 
better  experience  and  sense  of  the  railroad- 
owner  or  manager,  who,  each  year,  is  conduct- 
ing his  business  on  a  more  scientific  basis,  so  as 
to  produce  the  greatest  amount  of  good  trans- 
portation at  the  lowest  possible  figure,  and 
who  has  eliminated  considerable  waste  and 
foolish  competition,  thus  permitting  a  great 
decrease  in  rates  during  the  last  twenty  years. 
There  has  been,  however,  no  elimination  of 
competition  as  to  markets,  which  is  the  real 
competition  in  a  country  so  large  as  the  United 
States.  The  wool-grower  in  Montana  must  sell 
wool  in  competition  with  the  wool-growers  of 
Arizona  and  Kentucky,  as  well  as  of  Ohio  and 
Australia,  and  the  railroads,  in  order  to  help 
develop  Montana,  Arizona,  Kentucky,  and 
Ohio,  are  all  striving  to  place  the  wool  of  their 
respective  states  at  the  point  of  consumption, 
at  the  lowest  price  possible.  The  Northern 
Pacific  does  not  fix  the  rates  on  wool  from  Mon- 
tana. The  price  of  wool  in  Boston,  affected 
104 


RATE-MAKING   AND   THE   GOVERNMENT 

by  the  number  of  sheep  on  the  Australian 
farms  and  the  amount  of  free  tonnage  con- 
trolled in  Liverpool,  are  elements  beyond  the 
control  of  the  American  railroads  and  the 
American  Government.  The  Northern  Pacific 
cannot  charge  an  infinitesimal  fraction  of  a 
cent  more  than  will  enable  the  Montana  man 
to  place  wool  in  the  common  market  at  a  com- 
mon price,  grade  for  grade.  The  makers  of 
woodenware  in  Menasha,  Wisconsin,  and  in 
Tacoma,  Washington,  are  competing  to  reach 
the  same  markets,  and  the  railroads  leading 
from  those  two  places,  through  self-interest, 
are  adjusting  the  rates  as  low  as  they  can,  in 
order  to  help  develop  the  trade  in  their  respec- 
tive territories.  The  producers  of  lumber  in 
Idaho,  Montana,  and  Washington,  and  the 
producers  in  Minnesota,  Arkansas,  and  Louisi- 
ana are  all  trying  to  sell  in  the  markets  of  this 
country  and  abroad,  and  the  railroads  from  the 
respective  districts,  if  the  business  is  to  move 
at  all,  must  meet  competitive  prices  and  adjust 
rates  accordingly. 

Examples  without  number  could  be  given 
105 


THE  TRUTH  ABOUT  THE  RAILROADS 

of  this  competition  of  markets  in  raw  material, 
in  all  sorts  of  manufactured  articles,  and  in 
products  of  the  mine  and  farm.  In  fact,  this 
competition  as  to  markets  has  been  so  marked 
in  the  case  of  live-stock  that  rates  have  been 
brought  down  to  such  a  point  that  the  railroad- 
owner  is  hesitating  about  increasing  his  invest- 
ment in  cars  for  the  purpose  of  transporting 
live-stock,  because  the  margin  of  possible 
profit  in  the  business  is  so  small. 

Another  potent  cause  that  tends  to  prevent 
\  an  advance,  and  to  continue  a  general  fall  in 
rates,  is  that  the  railroads,  in  order  to  succeed 
at  all,  must  do  the  largest  volume  of  business 
possible  over  their  rails,  as  the  cost  decreases 
somewhat  as  the  volume  increases;  so  the 
officers  of  the  railroads  are  continually  endeav- 
oring to  increase  the  volume  of  their  trade,  and 
stand  ready  to  reduce  charges  whenever  it  is 
clear  that  a  development  of  country  and  an 
increase  in  tonnage  will  result. 

There  is  an  erroneous  idea  that  rates  are 
fixed  arbitrarily,  and  that  a  few  so-called 
"railroad  magnates"  fix  and  control  all  of  the 
1 06 


RATE-MAKING   AND   THE   GOVERNMENT 

rates  in  the  United  States;  and  that  their  chief 
idea  is  to  fix  them  high.  Nothing  can  be  fur- 
ther from  the  truth.  A  railroad^jate  is  the 
result  ofajarge  number  of  commercial  and 
geographical  forces  and  conditions  working 
one^  upon  the  other,  consultation  between 
shipper  and  railroads,  consultation  between 
officers  of  one  railroad  and  another,  a  study  of 
all  the  conditions  surrounding  the  problem,  — 
of  the  density  or  volume  of  business,  of  grades, 
engines,  car-supply,  and  cost, —  and  this  pro- 
cess is  going  on  every  day  among  thousands  of 
railroad  officers  and  shippers. 

Another  element  that  is  effective  in  the 
direction  of  causing  a  gradual  reduction  in 
rates,  if  the  railroads  are  left  reasonably  free, 
is  the  fact  that  railroad  transportation  cannot 
be  stored  up  and  saved  for  future  use.  The 
railroad-owner  and  manager  never  can  strike 
an  exact  balance  between  the  demand  for 
transportation  and  the  supply.  He  has,  there- 
fore, on  his  hands  at  all  times  some  unused 
transportation,  —  empty  cars  standing  on  side- 
tracks, engines  waiting  in  round-houses,  a 
107 


THE  TRUTH  ABOUT  THE  RAILROADS 

large  demand  for  them  at  one  time  of  the  year 
and  a  decreased  demand  at  another,  a  demand 
to  handle  business  east  but  nothing  west.  He 
therefore  goes  to  work  to  increase  trade  by 
seeking  to  adjust  rates  so  that  he  can  use  up 
part  of  his  idle  transportation  by  moving  prod- 
ucts between  points  where  there  was  no  such 
movement  before.  It  is  claimed  that  if  the 
Commission  have  power  to  fix  rates,  such 
power  would  only  be  exercised  occasionally, 
and  that  the  power  to  fix  a  given  rate  upon 
complaint  does  not  carry  with  it  the  power  to 
fix  rates  generally.  This  is  not  true.  Rates  in 
this  country  are  so  complicated,  are  so  related 
to  one  another,  different  cities  and  sections 
are  so  competitive,  that  a  change  in  one  rate 
will  force  changes  in  many  other  rates. 

Rates  really  fix,  or  adjust,  themselves,  just 
las  prices  iii  all  business  transactions  fix  and 
[adjust  themselves.  The  man  who  slaughters 
cattle,  hogs,  and  sheep  cannot  arbitrarily  fix 
~"the  price  to  be  charged  for  the  different  parts 
or  products  of  the  various  animals,  so  much  a 
pound  for  tenderloin  steak,  so  much  a  pail  for 
io8 


RATE-MAKING   AND   THE   GOVERNMENT 

lard,  so  much  for  hoofs,  so  much  for  sparerib, 
nor  can  any  one  else.  His  prices  are  fixed  for 
him  by  competitive  conditions,  and  unless  he 
receives,  on  the  whole,  for  all  of  the  different 
kinds  of  things  obtained  from  the  animals 
enough  to  pay  the  total  cost  of  his  business, 
and  some  profit,  he  ultimately  abandons  his 
business.  The  railroad  business  is  very  much 
more  complicated  than  the  business  of  the 
butcher,  and  there  are  an  almost  infinite  num- 
ber of  prices  in  the  business  which  are  fixed 
and  adjusted  just  as  the  prices  for  the  butcher 
are  fixed. 

If  one  man,  if  the  Government  itself,  owned 
all  the  railroads  of  the  United  States,  the  rates 
could  not  be  fixed  mathematically  at  a  central 
headquarters,  and  permit  any  development  of 
business. 

Re^ulatiitg  Is  one  thing,  and  fixing  is  an- 
other. The  present  law  grants  ample  power  to 
regulate,  to  say  what  Is  unfair  and  unjust,  and 
if  it  were  enforced  fairly  and  if  the  powers  now 
in  the  hands  of  the  Commission  were  used, 
much  of  the  alleged  popular  demand  for  giving 
109 


THE  TRUTH  ABOUT  THE  RAILROADS 

the  powers  to  fix  the  actual  rate  would  disap- 
pear. It  is  a  question  whether  we  are  not  even 
going  too  far  in  the  direction  of  regulating  for 
the  best  expansion  of  trade.  Our  neighbor 
Canada  encourages  its  railroads  so  much  that 
to-day  products  of  the  United  States  factories 
are  reaching  the  Pacific  Coast  via  Canada  in 
constantly  increasing  quantities,  because  the 
Canadian  roads  can  and  do  make  rates  which 
the  American  roads  cannot  make  without 
being  charged  with  violation  of  the  Interstate 
Commerce  Law. 

The  rule  that  the  inland  proportion  of  the 
rate  necessary  to  move  products  between  the 
United  States  and  foreign  countries  be  pub- 
lished, is  a  restriction  that  hampers  the  Amer- 
ican roads  in  the  efforts  to  expand  trade  and 
increase  foreign  commerce.  What  good  does  it 
do  any  one  in  the  United  States  to  have  car- 
loads of  manufactured  articles  delivered  at 
Seattle,  for  instance,  by  way  of  the  Canadian 
Pacific,  when  the  United  States  labor.  United 
States  coal,  and  United  States  railroads  could 
haul  the  product  all  the  way  .^  What  harm  does 
no 


RATE-MAKING   AND   THE   GOVERNMENT 

It  do  any  one  in  the  United  States  If  locomo- 
tives are  moved  from  Schenectady,  New  York, 
to  China  via  United  States  railroads  and  Puget 
Sound  rather  than  via  New  York  and  the  Suez 
Canal,  even  if  the  rate  from  Schenectady  to 
Puget  Sound  on  the  locomotives  destined  to 
China  is  less  than  on  those  used  at  Puget 
Sound,  and  even  if  the  rate  fluctuates  day  by 
day  or  week  by  week,  to  meet  competition  of 
the  Suez  Canal  or  the  German  maker  of  loco- 
motives ? 

What,  then,  are  the  complaints?  Those 
charged  with  the  duty  of  studying  and  admin- 
istering the  great  railroad  business  of  the  coun- 
try receive  complaints  of  various  kinds.  West 
of  the  Mississippi  and  Missouri  Rivers  they 
may  be  classified  as  follows.  In  the  order  of 
their  relative  importance :  — 

I.  Complaint  of  insufficient  facilities.  This, 
in  the  growing,  progressive,  and  expanding 
states  of  the  West,  is  a  steady  and  constant 
complaint,  and  it  requires  much  time,  money, 
and  energy  for  the  railroad-owners  and  officers 
to  keep  the  supply  of  transportation  up  to  the 
III 


THE  TRUTH  ABOUT  THE  RAILROADS 

demand.  The  complaints  come  in  for  more 
freight-cars,  for  more  passenger-trains,  for 
better  passenger-stations,  for  more  side-tracks, 
for  more  switch-engines,  for  under-crossings 
and  over-crossings  in  growing  cities,  for  branch 
Hnes  into  new  and  undeveloped  sections  of  the 
country;  and  every  railroad  west  of  the  Mis- 
sissippi must  spend  every  year  sums  equivalent 
to  from  five  to  twenty  per  cent  of  its  gross 
earnings  for  providing  what  is  needed  on  the 
road  already  in  existence,  —  not  counting 
sums  of  money  that  must  be  raised  for  building 
branch  lines  and  new  lines.  Would  bureau- 
cratic rate-fixing  stop  this  complaint,  or  would 
it  make  it  worse? 

.  2.  Complaints  of  the  relation  of  rates  between 
communities.  The  fact  that  communities  are 
growing  and  strive  each  to  outstrip  the  other 
in  the  West  produces  most  energetic  demands 
by  mercantile  organizations,  commercial  clubs, 
and  other  agencies  that  this  town  or  that  town 
have  the  rates  so  adjusted  that  it  can  enlarge 
its  sphere  of  operation  and  diminish  the  terri- 
tory of  its  rival  community.    Much  of  this 

112 


RATE-MAKING   AND   THE   GOVERNMENT 

complaint  is  caused  by  the  competition  of 
water-routes  and  Canadian  roads  that  are  not 
subject  to  the  Interstate  Commerce  Law.  The 
officers  of  the  freight  departments  of  the  great 
railroads  spend  as  much  time,  if  not  more,  on 
this  subject  as  on  any  other,  making  a  constant 
study  of  the  relation  of  rates  and  endeavoring, 
through  consultation  with  all  interests  and 
without  fear  or  favor,  to  harmonize  the  con- 
flicting demands  of  the  various  communities. 
A  commission  could  not  satisfy  this  class  of 
complaints,  and  would  be  driven  to  a  system 
of  rates  based  on  distance. 

3.  Complaint  of  relative  rates  between  indi- 
viduals. Many  individuals  continue  to  ask  the 
railroads  for  a  better  rate  on  their  particular 
business  than  may  be  used  by  their  competitor, 
although  this  request  for  personal  preference 
in  freight  rates  is  diminishing  steadily.  Let  it 
be  understood  that  the  federal  authority  will 
enforce  the  existing  law,  against  both  shipper 
and  railroad,  and  this  complaint  will  stop. 

4.  Complaints  that  the  power  of  deciding  ques- 
tions is  being  centralized  too  much.   The  rail- 

113 


THE  TRUTH  ABOUT  THE  RAILROADS 

roads,  in  their  effort  to  conduct  their  business 
without  personal  and  unjust  discrimination, 
have  centered  the  power  of  deciding  various 
questions  in  their  main  offices,  —  with  the 
result  that  sometimes  there  is  considerable 
delay  in  deciding  questions.  A  man  wants  a 
side-track  to  his  warehouse,  and  in  order  to 
decide  that  question  properly  considerable 
information  must  be  obtained  and  some  one 
has  to  render  a  decision  whether  the  company 
shall  spend  the  one  thousand  dollars  needed  to 
furnish  the  track.  Another  man  will  build  a 
manufacturing  plant  if  he  can  get  rates  that 
will  enable  him  to  reach  his  market  in  compe- 
tition with  some  other  point.  In  order  to 
decide  this  intelligently,  an  investigation  must 
be  made  of  prices,  cost  of  doing  business,  the 
relation  of  other  factories  producing  the  same 
article,  and  all  of  the  other  factors  that  enter 
into  the  making  of  the  price  of  his  product  at 
the  point  of  consumption.  This  takes  the  time, 
thought,  and  study  of  a  great  many  men  on 
the  railroad  and  causes  some  delay.  Give  a 
commission  power  to  fix  rates  and  you  would 
114 


RATE-MAKING   AND   THE   GOVERNMENT 

not  help  this  difficulty  but  would  increase  it. 

5.  Complaints  that  the  rates  charged  by  the 
railroads  are  in  themselves  too  high.  This  com- 
plaint is  not  very  common,  because  as  a  whole 
rates  are  very  low,  and  in  most  cases  the  man 
who  pays  the  freight  is  satisfied  with  the  rate 
in  itself,  provided  he  feels  sure  that  no  one 
else  is  doing  better  than  he  is. 

There  are,  and  always  will  be,  abuses  in  the 
conduct  of  railroad  business  as  in  the  conduct 
of  other  business.  That  the  abuses  of  which 
there  is  now  complaint  will  be  corrected  by 
taking  a  given  number  of  American  citizens 
and  making  them  officers  of  the  Government, 
and  charging  them  with  some  of  the  same  duties 
that  are  now  performed  by  the  same  class  of 
people  as  private  citizens,  is  very  doubtful. 

The  rebate  is  one  abuse,  but  that  is  prac- 
tically gone  as  to  the  freight  business.  There 
remains  personal  discrimination  in  the  passen- 
ger business  by  means  of  the  pass  or  free  ticket. 

Discriminations  between  localities  exist  and 
must  always  exist  in  a  country  as  large  as 
the  United  States,  and  with  as  many  vary- 
115 


t 


THE  TRUTH  ABOUT  THE  RAILROADS 

^  ing  conditions.  Such  discriminations  are  not 
caused  by  the  railroads  but  are  the  result  of 
geography  and  competition.  The  present  law, 
if  enforced,  is  ample  to  prevent  any  ^^ unjust" 
discrimination. 

High  rates  do  not  exist  as  a  rule,  and  all 
evidence  and  the  general  conditions  point  to 
the  fact  that  there  is  no  real  ground  for  appre- 
hension that  rates  will  be  materially  higher 
than  they  are  now  if  the  natural  play  of  com- 
mercial forces  and  geographical  and  market 
competition  is  allowed  to  go  on  without  arti- 
ficial interference.  In  fact,  if  railroad-owners 
are  not  hampered  and  restricted  too  much, 
and  are  encouraged  to  perfect  the  means  of 
transportation  and  the  expansion  of  business, 
the  rates  in  this  country  will  probably  con- 
tinue to  fall  gradually,  so  that  they  will  be 
below  the  present  very  low  average  of  three 
fourths  of  a  cent.  On  the  other  hand,  dis- 
courage the  railroad-owner,  and  give  the 
[Federal  Government  the  power  to  fix  the 
'.actual  rate,  and  the  tendency  will  be  to  an 
average  higher  rate. 

ii6 


RATE-MAKING   AND   THE   GOVERNMENT 

If  the  Federal  Government  is  to  fix  the 
actual  rate,  it  must  always  fix  it  high  enough/ 
to  pay  to  the  owner  of  the  property  costj 
depreciation,  and  interest.  If  the  Government 
does  not  so  fix  each  rate,  then  it  must  provide 
means  in  some  way  to  reimburse  the  owner 
of  the  road  for  any  loss.  To-day  in  handling 
an  expanding  business,  the  railroad-owner 
takes  the  risks  of  business  and  handles  some 
at  cost  or  less,  and  if  he  loses  he  must  blame 
himself  and  pocket  the  loss.  The  Government 
could  not  force  rates  upon  him  that  are  non- 
compensatory, and  the  result  would  be  that 
under  a  system  where  the  Government  fixed 
the  actual  rates,  there  would  be  a  checking  of 
the  movement  towards  lower  rates  by  the 
voluntary  action  of  the  roads  in  meeting 
commercial  conditions. 

There  are  some  abuses  connected  with  the 
private  car,  but  the  private  car  has  served  a 
most  useful  purpose  during  the  last  ten  or 
fifteen  years  in  helping  to  care  for  the  com- 
merce of  the  country.  The  money  and  energy 
of  the  railroad-builder  in  the  last  forty  years 
117 


THE  TRUTH  ABOUT  THE  RAILROADS 

have  been  very  fully  occupied  in  trying  to 
produce  the  railroad,  and  he  has  not,  in  every 
case,  kept  pace  with  the  demand  for  special 
facilities.  The  owner  of  the  private  car  stepped 
in  and  said,  "I  will  provide  cars  for  fruit  and 
perishable  produce,"  and  the  fact  that  he  did 
so  helped  to  develop  the  orange  business,  the 
butter,  egg,  and  dairy  business,  the  fruit  busi- 
ness, and  the  meat  business.  The  owner  of  the 
car  naturally  has  tried  to  get  as  high  rates  as 
possible  on  his  investment,  and  in  some  cases 
there  have  been  unreasonable  charges.  In  the 
evolution  of  the  railroad  business,  however, 
now  that  some  other  parts  of  the  railroad  are 
more  nearly  completed,  the  tendency  is. for 
the  railroads  to  eliminate  the  private  car  and 
provide  their  own  special  equipment,  and  this 
alleged  evil,  if  left  alone,  will  correct  itself 
in  time,  because  a  railroad,  like  every  other 
business,  must  make  use  of  all  by-products, 
and  cut  out  all  waste,  and  will  therefore  buy 
and  own  all  cars  needed  for  its  business. 

Railroads  have  naturally  been  unwilling  to 
spend  the  money,  in  every  case,  for  private 
ii8 


RATE-MAKING   AND   THE   GOVERNMENT 

tracks  for  an  industry  the  success  of  which 
was  uncertain..  As  a  result,  those  promoting 
a  given  industry  have  put  in  their  own  side- 
tracks, furnishing  their  own  switch-engines 
within  their  works,  and  delivered  their  own 
business  to  the  railways.  Incident  to  this 
there  have  been  some  cases  of  excessive  pay- 
ments to  the  owners  of  private  side-tracks 
and  private  switch-engines,  but  here  again  the 
evolution  of  the  business  and  the  better 
experience  and  judgment  of  the  railroad 
officers  are  eliminating  any  such  payments. 

What  are  the  remedies  for  these  abuses  J  In 
my  humble  judgment  these  various  abuses 
will  correct  themselves  through  the  good  sense 
of  the  American  business  man  and  through  the 
friction  of  business.  In  addition,  the  Inter- 
state Commerce  Law,  with  its  amendments, 
provides  ample  machinery  for  correcting  abso- 
lutely every  discrimination  as  between  indi- 
viduals. If  that  law  is  effectually  enforced,  it 
will  drive  out  the  few  remaining  cases  of  per- 
sonal discrimination  as  to  freight  shipments. 

I  think  the  effect  on  railroad-management, 
119 


THE  TRUTH  ABOUT  ^  THE  RAILROADS 

on  the  government  machinery,  and  on  the 
public  generally  would  be  good  if  the  princi- 
ples of  the  Interstate  Commerce  Law  were 
applied  strictly  to  the  passenger  business  as 
well  as  to  the  freight  business.  That  is  to  say, 
I  would  stop  the  making  of  preferential 
arrangements  for  transportation  of  passen- 
gers free  or  at  reduced  rates,  because  they 
occupy  positions  of  more  or  less  power,  re- 
sponsibility, and  trust.  As  is  well  known,  it  is 
customary  for  the  officers  of  the  Government 
—  municipal,  county,  state,  and  federal  —  to 
ask  for  and  to  receive  more  or  less  transporta- 
tion, and  some  also  for  their  family  and  friends. 
The  revenue  involved  in  this  practice  is  rela- 
tively insignificant,  because  the  great  bulk  of 
this  travel  would  not  take  place  if  a  free  pass 
or  reduced-rate  ticket  was  not  given.  The 
effect,  however,  on'  the  mind  of  the  public  is 
bad,  and  indirectly  the  impression. is  created 
that  the  railroad-owner,  through  the  free  pass, 
has  a  great  deal  more 'influence  than  he  really 
has,  that  there  is  much  more  interference  by 
the  railroad  in  the  machinery  of  the  Govern- 

I20 


RATE-MAKING   AND   THE   GOVERNMENT 

ment  than  there  really  is,  and  that  there  is  a 
much  greater  obligation  on  the  part  of  the 
recipient  of  the  pass  than  there  really  is.  Most 
passes  are  given  to  the  officers  of  the  various 
governments  as  a  compliment,  and  not  with 
the  idea  that  any  direct  benefit  is  to  be 
received,  —  possibly  with  the  hope,  in  some 
cases,  that  any  unfair  action  within  the  power 
of  the  receiver  of  the  pass  will  be  postponed 
or  prevented.  In  the  long  run,  however,  the 
railroad-owner,  the  government  officer,  and 
the  public  generally  would  be  in  a  better  rela- 
tion each  to  the  other  if  this  discrimination  as 
to  passenger  transportation  were  eliminated. 
Such  a  step  would  go  far  toward  making  the 
general  public  feel  that  the  railroad  was  not 
interfering  improperly  with  politics,  and  that 
it  did  not  have  something  within  its  power  to 
give  away  to  law-makers  and  others  in  author- 
ity that  other  people  did  not  have.  Let  the 
officers  of  the  Government,  from  the  highest 
to  the  lowest,  set  the  example  of  obeying  the 
law,  by  paying  for  their  railroad  travel  the 
same  rates  charged  the  general  public. 

121 


THE  TRUTH  ABOUT  THE  RAILROADS 

The  Interstate  Commerce  Law  also  has 
the  power  to  prevent  unjust  discrimination 
between  localities.  Let  the  Commission  be 
active  in  using  the  power  it  now  has  of  stat- 
ing when  there  is  unjust  discrimination;  their 
decision  and  the  force  of  public  opinion,  the 
pressure  of  business  men,  the  increasing  good 
sense  of  the  railroad-owners  and  officers,  will 
all  be  elements  in  determining  a  new  relation 
between  the  communities. 

As  to  private  cars  and  private  side-tracks,  I 
believe  that  any  difficulties  or  abuses  Incident 
to  their  use  will  eliminate  themselves,  just  as 
the  foolish  custom  of  paying  ticket  commis- 
sions eliminated  itself  by  the  voluntary  action 
of  the  railroads.  If,  however,  there  is  a  feeling 
that  the  Government  must  In  some  way  try  to 
hasten  the  Inevitable  result,  the  present  law 
seems  ample  to  cure  the  evils,  provided  the 
Federal  Government  will  use  its  machinery 
for  enforcing  It.  If  more  law  Is  needed,  a  very 
simple  one  will  correct  the  alleged  evil.  Let 
it  be  the  law  that  no  payment  shall  be  made 
by  a  railroad  or  by  an  Individual  for  the  use 

122 


RATE-MAKING   AND   THE   GOVERNMENT 

of,  or  service  furnished  by,  a  private  car  or 
private  side-track,  that  is  any  greater  than 
the  payment  made  contemporaneously  for  the 
same  kind  of  car  and  for  the  same  kind  of 
service  by  the  railroads  each  to  the  other. 
Then,  if  the  railroads  are  exchanging  cars 
between  themselves  at  twenty  cents  a  day, 
or  at  fifty  cents  a  day,  that  is  all  the  private 
car-owner  will  get;  if  railroads  furnish  ice  at 
^2.50  per  car,  that  is  all  the  private  car-owners 
will  receive;  if  the  railroads  switch  in  Chicago 
for  from  two  to  five  dollars  per  car,  that  is  all 
the  owner  of  the  private  side-track  will  get  in 
that  locality. 

The  attempt  by  the  Federal  Government  to 
fix  in  detail  the  exact  rates  to  be  charged  by 
the  railroads  would  be  unfortunate  for  the 
United  States.  Such  policy  is  un-American, 
in  that  it  subjects  a  large  number  of  the  citi- 
zens of  the  United  States  to  an  economic 
restriction  that  does  not  apply  to  those  en- 
gaged and  interested  in  other  classes  of  com- 
mercial, industrial,  and  agricultural  business. 
By  having  the  Government  fix  the  price  of 
123 


THE  TRUTH  ABOUT  THE  RAILROADS 

railroad  transportation,  an  obstacle  would  be 
placed  in  the  way  of  the  highest  success  of 
individual  effort  that  would  gradually  result 
in  depressing  and  repressing  the  efforts  of 
those  interested  in  or  engaged  in  the  railroad 
business  and  would  reduce  all  to  the  dead  level 
of  mediocrity. 

Such  a  plan  is  unjust,  because  it  would 
apply  to  the  large  number  of  American  people 
interested  and  engaged  in  the  railroad  busi- 
ness a  rule  not  applicable  to  others.  In  good 
faith  they  have  invested  their  time,  their 
training,  their  energy,  and  their  money  with 
the  idea  that  there  were  rewards  for  success  as 
in  all  other  businesses.  They  are  taking,  and 
have  taken,  great  risks,  as  do  all  who  are 
engaged  in  business,  to  obtain  the  benefits  of 
success,  if  that  comes,  just  as  they  must  submit 
to  the  result  of  failure,  if  that  comes. 

Such  a  plan  is  unnecessary,  because  the 
development  of  the  railroad  business  in  this 
country  has  been  such  that  we  have  the  most 
effective  service  as  a  whole,  the  lowest  rates 
as  a  whole,  the  highest  wages  as  a  whole,  and 
■        I24~ 


RATE-MAKING   AND   THE   GOVERNMENT 

the  most  progressive  management  of  the  busi- 
ness as  a  whole,  of  any  country  in  the  world. 
And  all  of  this  has  been  developed  in  fifty 
years  by  the  energy,  ability,  and  ingenuity  of 
the  American  business  man.  With  this  record 
in  the  past,  why  is  it  necessary  to  take  even  a 
chance  of  delaying  or  changing  this  marvelous 
development.'*  Or,  to  quote  President  Roose- 
velt again:  "Nothing  could  be  more  foolish 
than  the  enactment  of  legislation  which  would 
unnecessarily  interfere  with  the  development 
and  operation  of  these  commercial  agencies." 
Such  a  plan  is  unwise,  because  it  would  tend 
to  a  centralization  of  power  in  the  making  of 
the  rates  for  the  country.  As  I  stated  earlier, 
one  of  the  complaints  made  now  is  that  the 
decisions  are  not  made  promptly  enough. 
What  will  be  the  inevitable  effect  upon  the 
rate-making  machinery  of  the  railroads,  if 
every  rate  can  be  challenged,  and  the  power 
of  fixing  it  is  placed  with  a  commission  ?  The 
natural  effect  will  be  that  the  shipper  will  not 
be  satisfied  with  the  rate  made  by  the  railroad, 
and  the  railroad  will  hesitate  to  make  a  new 
125 


THE  TRUTH  ABOUT  THE  RAILROADS 

decision,  knowing  that  it  is  likely  to  be  ap- 
pealed from.  The  commission  will  be  in 
time  deluged  with  complaints.  In  trying  to 
settle  the  questions  submitted  to  it,  the  com- 
mission would  have  to  adopt  one  of  two 
courses.  It  might  try  to  do  exactly  what  the 
railroad-owners  are  doing,  —  adjust  rates 
upon  business  principles,  taking  into  consider- 
ation every  element  that  affects  the  movement 
of  commodities,  weighing  every  situation, 
discussing  the  claims  of  communities  and  ship- 
pers, and  finally  rendering  a  decision  which, 
when  made,  must  be  the  rate  until  the  same 
process  is  gone  through  with  again.  No  mat- 
ter how  wise  or  able  one  set  of  commissioners 
may  be,  it  would  be  physically  impossible  for 
them,  sitting  in  Washington,  to  dispose 
promptly  of  the  cases  submitted  to  them. 
Then  the  suggestion  would  be  for  additional 
commissions,  and  in  time  the  Federal  Govern- 
ment would  have  as  many  people  engaged  in 
the  rate-investigation,  rate-discussion,  and 
rate-adjusting  business  as  the  railroads  now 
have.  In  other  words,  they  would  become  the 
126 


RATE-MAKING   AND   THE  GOVERNMENT 

business  managers  of  the  railroads,  but  they 
would  have  no  responsibility  for  results,  no 
responsibility  of  ownership,  no  interest  in  pro- 
viding large  sums  of  money  necessary  to  keep 
the  railroads  equal  to  the  business,  no  respon- 
sibility or  incentive  for  increasing  business 
and  developing  new  territory. 

If  the  commission  did  not  adjust  the  rates 
on  business  principles,  —  and  it  could  not,  — 
it  would  have  to  adopt  some  simple  basis  to  be 
applied  to  every  one  without  regard  to  geo- 
graphical conditions  or  to  previous  commer- 
cial development.  It  is  manifestly  impossible 
for  the  Government  to  fix  the  rates  on  the 
postage-stamp  principle,  because  that  system 
creates  unjust  discrimination  to  the  greatest 
extent  conceivable.  To-day  mail  is  trans- 
ported from  San  Francisco  to  New  York  at  as 
low  a  price  as  it  is  from  Washington  to  Phila- 
delphia. Either  the  price  from  Washington  to 
Philadelphia  is  too  high,  or  the  price  from  San 
Francisco  to  New  York  is  too  low,  and  this 
principle  could  not  be  applied  to  the  fixing 
of  freight  rates  unless  the  Government  is  pre- 
127 


THE  TRUTH  ABOUT  THE  RAILROADS 

pared  to  make  good  any  deficiency  in  revenue 
from  the  taxpayers  as  a  whole. 

The  course  that  the  commission  would  be 
driven  into,  and  that  every  state  commission 
is  gradually  being  driven  into,  is  to  adopt  a 
mjleaj;.e  b^sis  of  rates.  The  effect  of  such  a 
basis  on  a  country  of  the  size  of  the  United 
States,  with  its  past  history  of  commercial 
development,  is  appalling  to  one  interested  in 
the  growth  of  the  country.  If,  in  the  begin- 
ning of  tFelrailroad  and  business  development 
of  this  country,  rates  had  been  fixed  arbitrarily 
on  the  basis  of  mileage,  the  States  west  of  the 
Mississippi  River  would  still  be  thinly  popu- 
lated, with  few  railroads  and  with  little  busi- 
ness of  any  kind.  Inland  cities,  without  access 
to  water  transportation,  would  not  have  been 
built  up  and  the  whole  growth  of  the  railroad 
and  commercial  system  of  this  country  would 
have  been  different.  Fortunately  for  the 
growth  of  this  country,  the  railroad-owners 
and  operators  did  not  adopt  a  rigid  mileage 
basis  of  rates,  and  as  a  result  the  country  has 
grown,  agriculture  has  grown,  diversified 
128 


RATE-MAKING   AND   THE   GOVERNMENT 

manufacture  has  grown,  and  there  has  been 
an  equahzation  of  commercial  situations  that 
has  permitted  a  development  of  cities  and 
communities,  which  under  the  mileage  basis 
would  all  have  been  congested  in  a  very  few 
places.  Give  the  commission  the  power  to  fix 
rates,  and  the  land  values  of  the  agricultural 
States  west  of  the  Mississippi  River  would  be 
at  once  affected.  An  advance  of  value  would 
be  stopped,  and  a  decrease  in  value  would 
result.  To-day  the  railroads,  in  their  desire  to 
develop  territory,  make  the  rates  on  wheat 
from  North  Dakota,  on  wool  from  Montana,^ 
on  lumber  from  Washington,  on  butter  from 
Iowa,  so  as  to  compete  with  similar  products 
raised  in  Ohio,  in  Kentucky,  in  Mississippi, 
in  Pennsylvania,  in  New  England.  If  the 
Government  has  to  fix  the  rate,  what  right 
will  it  have  to  refuse  to  the  wool-grower  of 
Kentucky,  the  wheat-grower  of  Ohio,  the 
lumber-producer  of  Mississippi,  the  butter 
man  of  Pennsylvania,  the  same  rate  per  mile 
that  is  charged  the  producer  in  North  Dakota, 
Iowa,  Montana,  and  Washington?  No  matter 
129 


THE  TRUTH  ABOUT  THE  RAILROADS  . 

how  low  the  rate  is  made  for  the  first  ten  miles, 
or  for  one  mile  of  railroad  transportation, 
when  the  haul  is  one  thousand  or  two  thou- 
sand miles  and  the  mileage  basis  is  used,  the 
rate  will  be  so  high  that  the  business  will  not 
move. 

On  a  mileage  basis  of  rates  the  business  of 
the  commercial  centers  west  of  the  Mississippi 
would  be  destroyed.  Cities  on  the  oceans  and 
the  Great  Lakes  would  have  advantages,  but 
the  inland  cities  and  agricultural  districts 
would  be  depressed.  When  the  agricultural 
and  manufacturing  population  in  the  great 
States  between  the  Alleghanies  and  the  Rocky 
Mountains  realize  —  as  they  will  sooner  or 
later  —  what  a  set  of  rates  based  on  distance 
will  mean  to  them  and  to  their  children,  there 
will  be  a  real  rate  agitation  compared  with 
which  the  present  stimulated  demand  will  be 
as  nothing. 

Far  better  the  difficulties  existing  under  the 
present  system  of  commercial  freedom  than  to 
turn  to  a  rigid  governmental  plan  for  fixing 
railroad  rates. 


THE  RELATION  BETWEEN  THE  FARMER  AND  THE 
RAILROAD  1 

Agriculture  was  so  highly  regarded  among 
the  people  of  antiquity  that  the  Hindus 
ascribed  it  to  the  great  god  Brahma,  the 
Egyptians  believed  it  to  have  been  given  to 
man  by  Isis,  the  Greeks  credited  it  to  Demeter, 
and  the  Romans  to  Ceres,  and  the  farmer 
Cincinnatus  was  called  from  the  plow  to,  and 
twice  served  in,  the  highest  offices  of  the  state. 
In  the  United  States  it  is  the  greatest  business, 
in  the  number  of  people  engaged  in  it,  in  the 
money  value  of  the  product,  and  in  its  im- 
portance to  the  welfare  of  all  the  people. 

The  development  of  agriculture  in  the 
United  States  began  with  the  settlement  of 
the  colonies,  and,  until  the  Civil  War,  was 
rapidly  extended.   In  the  ten  years  ending  in 

*  Address  delivered  before  the  Tri-State  Grain  and 
Stock  Growers'  Association,  at  Fargo,  N.  D.,  Jan.  17, 191 2. 


THE  TRUTH  ABOUT  THE  RAILROADS 

1800,  the  area  brought  within  the  limits  of 
settlement  was  65,000  square  miles.  Between 
1 8 10  and  1820,  the  American  people,  then 
numbering  8,250,000,  Increased  the  density  of 
population  In  every  section  of  their  settled 
territory,  increased  their  manufacturing  cap- 
ital two-fold  in  spite  of  a  three  years'  war, 
and  occupied  101,000  additional  square  miles. 
The  Civil  War  checked  the  westward  flow  of 
people,  and  retarded  development,  but  did 
not  stop  it,  and  since  1870  the  development 
that  characterized  earlier  days  has  proceeded 
without  interruption. 

The  growth  of  farming  In  this  country  shows 
two  distinct  phases,  one  lasting  until  i860, 
and  the  other  starting  about  that  time  and 
not  yet  complete.  Prior  to  the  Civil  War, 
agriculture  was  treated  more  as  an  occupation, 
or  means'of  subsistence.  Fertile  soil  was  prac- 
tically free  to  all.  There  was  little  outside 
pressure  to  make  a  farmer  careful  to  preserve 
the  productiveness  of  the  soil,  and  the  agri- 
cultural products  were  generally  greater  than 
the  demand,  partly  because  transportation 
132 


THE  FARMER  AND  THE  RAILROAD 

was  limited  and  high-priced,  compared  with 
to-day.  A  movement  which  began  about  the 
time  of  the  war,  coincident  with  the  growing 
demand  for  technical  education,  has  some- 
what changed  the  nature  of  farming  in  this 
country,  and  has  made  it  an  important  busi- 
ness rather  than  an  occupation.  Population 
has  grown  rapidly,  and  the  demands  of  the 
people  for  food  have  become  great.  More  and 
more  the  attention  of  intelligent  men,  in  the 
farming  ranks  and  without,  has  been  di- 
rected toward  the  future  and  the  question  of 
providing  the  necessities  of  life  to  a  popula- 
tion fast  approaching  the  one-hundred-million 
mark. 

A  rapidly  growing  "country  needed  men 
skilled  in  the  sciences  and  arts  of  life  to  deal 
with  its  new  conditions,  and  while  purely  com- 
mercial activities  were  the  first  to  feel  this 
need,  farming  also  began  to  feel  it,  and  the 
movement  which  Introduced  technical  edu- 
cation and  In  a  degree  supplanted  the  old 
classical  schools  with  those  designed  to  develop 
the  kind  of  men  the  country  needed  gave  to 
133 


THE  TRUTH  ABOUT  THE  RAILROADS 

the  business  of  fanning  the  first  schools  for  the 
scientific  teaching  of  agriculture.  It  was  the 
West,  and  not  the  older  and  wealthier  East, 
that  gave  the  United  States  its  first  agricul- 
tural school.  The  second  constitution  of 
Michigan,  then  close  to  the  western  frontier, 
provided  in  1850  for  the  founding  of  an  insti- 
tution to  teach  agriculture,  and  the  movement, 
spreading  eastward,  resulted  in  the  incorpora- 
tion of  what  is  now  Pennsylvania's  State  Col- 
lege of  Agriculture  in  1854,  and  the  incorpora- 
tion of  Maryland's  agricultural  college  and 
the  founding  of  a  school  of  agriculture  in 
Massachusetts,  both  in  1856.  The  work  thus 
started  reached  Congress,  and  resulted,  in 
1857,  in  the  introduction  of  a  "land-grant" 
aid  bill,  proposed  by  Hon.  Justin  S.  Morrill, 
and  passed  in  1862.  The  Department  of 
Agriculture  was  created,  first  as  a  bureau,  in 
the  same  year. 

Up  to  1905,  the  progress  of  agricultural 

education  under  this  encouragement  was  such 

that  66  institutions  had  been  organized,  with 

an  endowment  fund  amounting  to  ^12,045,629. 

134 


THE  FARMER  AND  THE  RAILROAD 

In  May  of  1910  there  were  975  institutions  giv- 
ing instruction  in  agriculture.  There  has  been 
a  rapid  development  at  the  same  time  of  col- 
lege-extension work  in  agriculture,  agricul- 
tural education  under  the  county  system,  and 
consolidated  rural  schools,  together  with  num- 
erous other  activities,  which  have  been  of 
practical  value  in  creating  better  standards  of 
knowledge  and  practice  of  farming. 

One  who  studies  the  history  of  the  world's 
farming  cannot  fail  to  be  struck  with  the  fact 
that  the  dignity  and  importance  of  the  farm- 
er's calling  have  always  been  recognized, 
although  more  in  some  countries  than  in 
others,  not  alone  by  the  passing  of  laws  for  his 
encouragement,  but  by  the  cooperation  and 
help  of  those  in  other  occupations.  In  the  reign 
of  Henry  VII  of  England,  in  the  year  1488, 
a  statute  was  passed  to  prevent  the  acqui- 
sition of  large  land-holdings,  in  order  to  pre- 
vent lands  formerly  tilled  from  becoming  idle 
and  unproductive.  Half  a  century  later  the 
English  law  shows  a  quaint  statute,  curiously 
like  some  of  the  legislation  one  hears  about 
135 


THE  TRUTH  ABOUT  THE  RAILROADS 

now,  which  was  passed  because  the  growing  of 
sheep  had  become  so  profitable  that  many  had 
engaged  therein.  It  says :  "  Some  have  24,000 
sheep,  some  20,000,  some  10,000,  some  6,000, 
some  4,000,  and  some  more  and  some  less." 
And  yet  it  alleged  the  price  of  wool  had  nearly 
doubled,  "sheep  being  come  to  a  few  persons' 
hands."  A  penalty  was  therefore  imposed  on 
all  who  kept  above  2000  sheep,  and  no  person 
was  to  take  in  farm  more  than  two  tenements 
of  husbandry.  This  attempt  at  "trust-bust- 
ing" apparently  did  not  work,  for  in  1597  it 
was  necessary  to  enact  a  new  statute  that 
arable  land  made  into  sheep-pasture  be  re- 
turned to  tillage,  and  no  more  arable  land  be 
devoted  to  pasture. 

Literature  of  agriculture,  prepared  for  the 
help  of  the  farmer,  dates  back  in  England  to 
the  thirteenth  century,  and  Thomas  Tusser 
created  so  much  interest  in  1562  with  a  vol- 
ume called  "Five  Hundred  Points  of  Hus- 
bandry" that  one  hundred  and  twenty-five 
years  afterward  Lord  Molesworth  recom- 
mended that  it  be  taught  in  the  schools.  The 
136 


THE  FARMER  AND  THE  RAILROAD 

live-stock  business  was  well  understood  and 
carefully  studied  even  then.  The  preface  to  a 
volume  of  Sir  Anthony  Fitzherbert,  published 
in  1523,  is  curiously  similar  to  the  publications 
the  excellent  agricultural  colleges  are  now 
sending  to  the  farmer,  for  it  says:  "An  hous- 
bande  cannot  well  thryve  by  his  corne,  with- 
out he  have  other  cattell,  nor  by  his  cattell 
without  corne.  An  because  that  shepe,  in 
myne  opinion,  is  the  most  profitablest  cattell 
that  any  man  can  have,  therefore  I  purpose  to 
speake  fyrst  of  shepe."  This  is  sound  advice 
to-day,  except  that  the  great  "American  Hog" 
is  not  mentioned,  and  he  is  really  more  impor- 
tant to  the  modem  American  farmer  than 
sheep. 

Some  phases  of  the  present  agricultural 
situation  in  the  United  States  give  reason  to 
hope  that  the  movement  to  make  farming 
more  than  ever  a  business,  conducted  along 
scientific  business  lines,  will  develop  great 
headway  during  the  next  decade.  In  the 
twenty  years  ending  in  1910  the  population  of 
the  United  States  Increased  about  one  third, 
137 


THE  TRUTH  ABOUT  THE  RAILROADS 

—  from  62,947,000  to  91,972,000.  Immigra- 
tion during  the  ten  years  ending  in  1910  was 
8,795,386,  or  more  than  double  that  of  the 
preceding  ten  years.  The  total  of  unappropri- 
ated and  unreserved  lands  in  the  United  States 
has  fallen  since  1890  from  55.32  per  cent  of  the 
total  area,  to  40.98  per  cent,  and  the  59 
per  cent  appropriated  or  reserved  represents 
the  best  selections. 

In  the  three  States  of  North  and  South 
Dakota  and  Minnesota,  there  were,  in  1900, 
47,654,452  acres  of  unappropriated  and  unre- 
served lands,  and  in  1910  but  7,536,333  acres. 
With  the  reduction  in  the  available  government 
land,  farms  have  become  more  valuable,  and 
less  easily  obtained  by  those  of  small  means. 
The  average  value  per  farm  of  all  farm  prop- 
erty has  increased  from  $3,649  in  North 
Dakota  in  1900  to  $13,109  in  1910.  In  South 
Dakota,  the  average  value  in  1900  was  $2,901, 
and  in  1910  it  was  $15,018.  In  Minnesota  the 
average  value  in  1900  was  $3,549,  increasing  in 
1910  to  $9,456.  It  is  interesting  to  compare 
here  the  average  value  of  the  holdings  of  the 
138 


THE   FARMER  AND  THE   RAILROAD 

owners  of  the  securities  representing  the 
Northern  Pacific  road,  ^423,000,000,  owned  by 
nearly  25,000  people,  ^16,290  to  the  individual 
owner,  —  not  very  much  more  than  the  value 
of  the  average  farm  in  North  and  South 
Dakota.  (A  recent  governmental  valuation 
fixed  the  value  of  the  road  at  $488,000,000,  or 
$65,000,000  more  than  the  capital  outstand- 
ing.) The  value  of  North  Dakota's  farms  and 
buildings  in  i9iowas  $822,035,000,  an  increase 
of  314  per  cent  in  ten  years.  In  South  Dakota 
the  total  was  $1,005,080,807,  an  increase  of 
356  per  cent  in  a  decade.  In  Minnesota  farm 
land  and  buildings  were  worth  $1,259,510,000, 
an  increase  in  the  same  period  of  88  per  cent. 
These  figures  show  how  rapidly  farm  values 
have  advanced  as  a  result  of  energetic  farm 
development  and  improvement,  coupled  with 
cheap  rail  transportation,  permitting  distribu- 
tion of  farm  products  to  many  markets.  In 
1909  the  wheat  crop  of  these  three  states 
alone  had  a  value  of  $216,647,000.  The  wealth- 
production  of  the  farms  of  the  United  States 
has  increased  from  $5,017,000,000  in  1900  to 
139 


,  THE  TRUTH  ABOUT  THE  RAILROADS 

$8,926,000,000  In  i9io,andhas  nearly  doubled 
since  1897. 

The  movement  of  settlers  to  the  West  has 
reduced  the  areas  of  government  land  and 
increased  the  acreage  on  farms  from  536,081,- 
000  in  1880  to  873,729,000  in  191 1.  The  occu- 
pation of  the  rich  and  unoccupied  prairie  lands 
has  greatly  stimulated  the  development  of 
irrigation  in  the  West,  the  acres  irrigated 
having  grown  from  3,361,000  in  1889  to 
11,000,000  in  1907,  because  a  decreasing  land- 
supply  has  made  it  both  necessary  and  desir- 
able for  the  people  to  find  ways  of  utilizing 
areas  formerly  unproductive. 

Corn  retained  for  domestic  consumption 
has  increased  from  1,865,000,000  bushels  In 
1900  to  2,734,000,000  in  1910,  while  the  1900 
exports  of  213,123,000  bushels  fell  in  19 10  to 
38,128,000  bushels.  In  1900,  361,207,084 
bushels  of  wheat  were  retained  for  domestic 
consumption,  while  in  19 10  there  were  re- 
tained 649,824,682  bushels,  and  the  exports  of 
186,096,762  bushels  in  1900  had  fallen  to 
87,364,318  bushels.  This  drop  in  exports  tells 
140 


THE  FARMER  AND  THE  RAILROAD 

clearly  the  story  that  our  own  people  are 
drawing  more  heavily  each  year  on  our  farms 
for  their  food-supply. 

Secretary  Wilson  of  the  Department  of 
Agriculture  takes  the  view  expressed  recently 
by  President  Taft,  that  farm  production  will 
keep  pace  with  the  country's  necessities,  yet  it 
is  very  apparent,  from  the  shrinking  areas  of 
land  available  and  not  in  farms  and  from  the 
rising  prices  of  farm-lands  due  to  greater  de- 
mand for  them  with  the  increase  of  population, 
that  the  people  of  the  United  States  are  begin- 
ning to  catch  up  with  the  immense  annual 
farm  production,  and  that  in  the  future,  with 
less  raw  and  very  productive  land  coming  in, 
there  must  be  increasing  production,  or  the 
people  will  not  be  as  well  fed  or  as  cheaply  fed 
as  they  have  been. 

In  1800  only  4  per  cent  of  the  people  lived 
in  cities  of  8000  or  more,  while  in  1910  the 
proportion  was  about  40  per  cent.  In  1840, 
77.5  per  cent  of  all  at  work  were  engaged  in 
agriculture,  and  in  1900  but  35.7  per  cent. 
Should  the  next  decade  demonstrate  that  the 

14.1 


THE  TRUTH  ABOUT  THE  RAILROADS 

continual  drift  of  people  Is  away  from  agricul- 
ture, thus  bringing  about  a  greater  demand 
than  the  present  farm  methods  can  meet,  the 
responsibility  upon  the  farmer  will  be  heavy, 
for  the  welfare  of  the  people  will  rest  more  than 
ever  before  upon  him,  and  upon  his  efficient 
work  on  the  farm  will  depend  very  largely  the 
solution  of  the  quality  and  price  of  living 
enjoyed  by  the  man  in  the  city. 

If  the  population  grows  at  its  present  rate, 
we  shall  have  In  the  United  States  by  1950 
two  hundred  million  people,  and  the  demand 
for  the  farm  products  required  for  their  sub- 
sistence will  have  doubled.  Competent  author- 
ities estimate  that  to  meet  this  demand  it  will 
be  necessary  to  Increase  the  product  of  each 
acre  of  land  one  per  cent  a  year,  or  one  tenth 
for  each  succeeding  ten  years.  The  land-heri- 
tage of  the  people  of  the  continental  United 
States  is  about  1,900,000,000  acres,  of  which 
1,000,000,000  acres  or  a  little  less  Is  now  con- 
sidered untlllable.  The  United  States  Depart- 
ment of  Agriculture  estimates  the  total  arable 
land  of  the  country  at  950,000,000  acres,  of 
142 


THE   FARMER  AND  THE  RAILROAD 

which  873,729,000  acres  have  already  been 
taken  up  and  are  in  farms.  There  remain 
76,271,000  acres  of  arable  area  not  in  farms, 
and  while  it  must  be  conceded  that,  of  the  area 
classed  as  untillable,  future  scientists  will  find 
means  of  utilizing  some  portion,  it  will  prob- 
ably be  no  great  part.  What  remains  to  be 
utilized  for  farm  purposes,  plus  that  which 
may  later  be  brought  under  cultivation,  is 
small,  compared  with  the  probable  population 
in  1950  and  the  proportion  of  the  arable  area 
now  occupied  by  farms. 

It  is  fortunate  for  the  future  of  North 
Dakota  and  the  adjoining  States  of  South 
Dakota  and  Minnesota  that  their  areas  of 
unoccupied  land,  and  consequent  opportunities 
for  the  settler,  are  so  large.  Of  North  Dakota's 
total  land-area,  45.5  per  cent  is  in  farms.  Of 
South  Dakota's  area,  the  land  in  farms 
amounts  to  32.2  per  cent,  and  in  Minnesota 
but  38  per  cent  of  the  land-area  is  in  farms. 
The  best  authorities  in  North  Dakota  estimate 
that  there  still  remain  about  10,000,000  acres 
that  can  be  profitably  put  into  plow  land,  and 
143 


;  THE  TRUTH  ABOUT  THE  RAILROADS 

that  future  years  will  see  some  growth  in  this 
amount.  In  Minnesota  and  South  Dakota 
similar  possibiHties  exist,  yet  neither  the 
farmer  nor  the  business  man  should  forget  that 
the  present  rate  of  farm-development  is  rapid, 
and  that  the  time  when  these  States  will  come 
to  the  limit  of  their  present  unused  arable-land 
resources  is  within  sight. 

The  number  of  farms  in  North  Dakota  has 
increased  two  and  two  thirds  times  in  twenty 
years.  For  the  ten  years  ending  in  1910  the 
increase  of  population  was  about  81  per  cent, 
but  the  increase  in  acreage  of  farm  land  was 
about  83  per  cent.  The  number  of  farms  in- 
creased 64  per  cent,  and  the  increase  in  land- 
values  alone  added  ^557,028,000  to  the  wealth 
of  the  farmers.  In  South  Dakota  the  percent- 
age of  increase  in  the  number  of  farms  was 
greater  than  the  percentage  of  increase  in 
population,  and  was  ten  times  as  large  as  the 
average  increase  for  the  ten  years  ending  in 
1900,  Minnesota  showed  less  increase  during 
the  decade,  but  added  1478  new  farms.  The 
effect  of  this  demand  for  land  is  shown  in  the 
144 


THE   FARMER  AND  THE   RAILROAD 

large  addition  to  the  wealth  of  the  farmers 
from  the  rising  value  of  North  Dakota  land. 
For  the  three  States  this  total  amounts  to  the 
surprising  sum  of  $1,730,228,000,  or  at  the  rate 
of  $14,418,566  a  month  for  the  entire  ten  years. 

Railroad-building  began  in  North  Dakota 
in  1 87 1,  when  the  Northern  Pacific  reached 
Fargo.  In  1872  it  extended  its  main  line  west. 
In  only  forty  years  there  has  been  a  great 
change.  The  people  from  i860  to  1875  suffered 
many  discomforts,  whether  they  were  farmers 
or  railroad  men,  compared  with  the  comforts 
and  even  luxuries  that  are  common  to-day  all 
over  the  State,  as  a  result  of  the  working  to- 
gether of  the  two  great  forces  of  agriculture 
and  transportation. 

The  present  conditions  of  life  are  gratifying, 
and  younger  men  should  remember  the  hard 
work  of  the  last  forty  years  in  overcoming 
obstacles,  and  realize  the  responsibility  for  the 
future  laid  upon  them.  The  people  of  this 
country  will  demand  an  increase  of  acre  pro- 
duction amounting  to  10  per  cent  a  decade 
during  the  coming  fifty  years. 
145 


THE  TRUTH  ABOUT  THE  RAILROADS 

To  the  extent  that  the  people  of  the  country 
as  a  whole  appreciate  their  growing  needs, 
there  will  grow  up  a  public  sentiment  and 
demand  for  better  farming.  There  is  a  per- 
sonal responsibility  upon  every  farmer  to  meet 
the  demand  of  consumption.  The  average 
wheat-yield,  which  for  a  year  like  1909  in  these 
three  States  was  14.8  bushels  an  acre,  must  be 
raised  ten  years  from  now  not  merely  one 
bushel  an  acre  a  year,  which  would  add  to  the 
income  from  this  crop  from  $10,000,000  to 
$15,000,000,  depending  on  the  price  of  wheat, 
but  a  bushel  and  a  half,  to  make  an  average 
of  16.2  bushels.  Within  twenty  years  the 
average  will  have  to  be  raised  to  17.8  bushels. 

If  only  ten  men  farm  well,  and  their  fellow- 
farmers  in  a  county  farm  poorly,  these  aver- 
ages cannot  be  met.  It  is  the  consistent  result, 
rather  than  the  occasional  exploit  of  a  brilliant 
man,  that  counts.  In  these  three  States  there 
are  men  who  are  making  good  profits  out  of 
farming,  producing  yields  far  better  than  the 
average,  and  not  only  maintaining,  but  in  some 
cases  increasing,  the  fertility  of  their  fields. 
146 


THE  FARMER  AND  THE  RAILROAD 

They  are  demonstrating  what  has  been  proved 
in  Germany  and  England,  where  some  of  the 
cultivated  land  has  been  cropped  for  ten  cen- 
turies, that  constant  cultivation,  if  it  is  wise 
cultivation,  does  not  exhaust  the  soil.  In  those 
countries,  and  on  this  old  land,  the  crop-yield 
is  much  heavier  than  in  this  country.  The  soil 
of  Europe  has  no  peculiar  characteristics  to 
account  for  this  better  production;  on  the  con- 
trary, there  is  every  reason  to  believe  that  the 
same  methods  of  cultivation,  which  resulted 
there,  as  they  will  here,  from  the  pressure  of 
larger  demands  for  the  products  of  the  farm, 
will  produce  the  same  yields  in  these  states. 

There  is  great  force  in  public  opinion.  The 
demand  for  a  "safe  and  sane  "  Fourth  of  July 
In  the  United  States  reduced  the  deaths  re- 
sulting from  the  celebration  of  the  national  holi- 
day from  215  in  1908  to  57  in  191 1,  and  greatly 
limited  the  sale  of  dangerous  fire-crackers  and 
explosives.  Public  opinion  killed  the  practice 
of  rebating  on  the  railroads  of  the  United 
States,  for  people  generally  came  to  the  view 
that  it  was  wrong,  although  it  had  existed 
147 


/  THE  TRUTH  ABOUT  THE  RAILROADS 

for  many  years,  and  there  were  laws  against 
it  which  were  ignored  by  shipper  and  railroad 
man  both  until  public  opinion  brought  about 
their  enforcement. 

In  the  Western  Territories  of  the  United 
States  the  possession  of  a  horse  was  so  essential 
to  life  that  horse-stealing  at  one  time  was 
regarded  as  a  crime  of  such  degree  that  one 
taken  in  the  act  was  put  to  death  by  hanging 
from  a  limb  of  a  tree.  Justice  was  thus  sum- 
marily meted  out  to  the  offender  who  willfully 
deprived  his  neighbor  of  his  property.  Yet 
to-day  a  careless  farmer  allows  weeds  to  grow 
in  his  fields  without  concern,  and  the  seeds  are 
carried  by  the  wind,  and  a  whole  neighborhood 
may  be  seeded.  The  injury  to  his  neighbor  is 
just  as  definite  and  tangible  as  though  he  had 
deliberately  gone  into  his  neighbor's  fields  and 
gathered  and  carried  away  the  crops.  "An 
eye  for  an  eye,  a  tooth  for  a  tooth,"  was  the 
ancient  law.  This  would  require  damage  for 
damage.  In  a  case  which  was  carried  up  to  the 
highest  tribunal  in  Missouri,  where  a  property- 
owner  allowed  weeds  to  grow  unrestrained  in  a 
148 


THE  FARiMER  AND  THE  RAILROAD 

vacant  lot,  it  was  decided  that  an  ordinance 
compelling  cutting  of  noxious  weeds  was  valid, 
that  no  injustice  was  done  the  individual  in 
requiring  him  to  cut  the  weeds,  that  it  was  in 
the  interest  of  the  public  health,  and  that  the 
municipality  had  the  authority  to  compel 
the  owner  of  the  offending  property  to  cut 
the  weeds  and  abate  a  public  nuisance.  What 
palliation  can  be  offered  for  the  man  who, 
through  carelessness  and  indifference  to  the 
welfare  of  the  community,  allows  weeds  of  the 
most  vicious  character  to  grow  unrestrained 
on  his  land  and  allows  the  seeds  to  be  carried 
throughout  the  neighborhood?  Is  this  less  a 
crime  than  depriving  a  man  of  his  just  prop- 
erty by  theft  ?  Yet  we  often  see  fields  in  which 
weeds  are  allowed  to  grow  and  mature  their 
seed,  where  a  few  hours'  work  would  save  great 
loss.  Whole  valleys,  thousands  of  acres  in 
extent,  have  been  polluted  with  foul  seeds  by 
the  careless  indifference  of  one  man  who  neg- 
lected to  destroy  a  small  patch  of  weeds  that 
grew  in  his  field. 

Carelessness  of  regard  for  one's  neighbor  is 
149 


THE  TRUTH  ABOUT  THE  RAILROADS 

as  wrong  today  as  it  was  a  thousand  years 
before  the  time  of  Christ.  Then  it  was  decreed : 
"  If  an  ox  gore  a  man  or  woman,  that  they  die, 
[and]  if  the  ox  were  wont  to  push  with  his 
horn  in  time  past,  and  it  hath  been  testified 
to  his  owner,  and  he  hath  not  kept  him  in, 
but  that  he  hath  killed  a  man  or  a  woman; 
the  ox  shall  be  stoned,  and  his  owner  also  shall 
be  put  to  death."  (Ex.  xxi,  28,  29.)  If  a  man 
was  careless  of  the  safety  of  his  neighbor,  if 
after  he  had  been  duly  warned  that  his  ox  was 
"wont  to  push  with  his  horn,"  he  still  allowed 
him  to  run  at  large,  then  the  most  severe  pen- 
alty known  to  law,  that  of  death,  was  meted 
out. 

Public  sentiment  in  some  states  goes  even 
further,  and  there  are  state  boards  charged 
with  the  stamping  out  of  stock  diseases,  which 
are  given  power  to  enter  upon  a  farm  and 
destroy  animals,  if  it  is  necessary  for  the  pro- 
tection of  the  sound  stock  of  other  farmers.  In 
the  Pacific  Northwest  there  are  state  laws  and 
state  inspectors  for  the  purpose  of  stamping 
out  orchard  pests,  and  the  inspectors  have  a 
150 


THE   FARMER  AND  THE  RAILROAD 

right  to  cut  and  burn  diseased  trees.  The 
growth  of  a  strong  pubHc  opinion  against  poor 
orcharding  is  marked  by  the  formation  of  vol- 
untary associations  of  fruit-growers,  with  their 
own  inspectors,  having  the  same  powers. 

Sound  pubHc  opinion  should  be  encouraged, 
and  the  sentiment  of  farmers,  as  a  body, 
should  be  such  that  poor  farming  will  be 
stamped  as  a  moral  crime,  a  crime  against  one's 
fellows,  for  shiftless  farm  methods  injure  the 
property  and  offset  the  labor  of  the  adjacent 
farmer  who  is  trying  to  produce  the  best  re- 
sults; and  a  crime  against  the  people  as  a  whole, 
for  they  have  charged  the  farmer  with  produc- 
tion of  their  food  and  expect  him  to  meet  the 
responsibilities  they  have  imposed.  It  is  notice- 
able that  an  excellently  managed,  well  main- 
tained, and  highly  productive  farm  in  a  com- 
munity creates  a  spirit  of  emulation,  and  tends 
to  elevate  the  standards  of  farming  on  adja- 
cent properties.  With  a  knowledge  of  how  to 
farm  better,  local  public  opinion  tends  in  the 
direction  of  condemnation  of  the  careless  and 
indifferent  farmer. 

151 


THE  TRUTH  ABOUT  THE  RAILROADS 

The  average  wheat-yield  of  1909  is  a  fair 
standard  by  which  to  judge  the  average  pro- 
duction of  these  three  states.  The  average 
wheat-production  per  acre  for  the  United 
Kingdom  during  the  ten  years  ending  in  1899 
was  33.1  bushels.  These  states,  with  com- 
paratively new  and  very  rich  land,  are  there- 
fore raising  but  44.7  per  cent  of  the  crop  that  is 
being  produced  on  the  very  old  lands  of  Great 
Britain.  Germany's  average  for  the  ten  years 
ending  in  1899  was  28.9  bushels,  almost  twice 
as  much  as  Minnesota  and  North  and  South 
Dakota  raised,  and  more  than  twice  as  much 
as  the  general  wheat  average  in  the  United 
States.  In  1900  the  tri-state  wheat  acreage 
was  15,600,000  acres.  At  the  average  farm 
value  of  December  ist,  the  value  of  the  wheat- 
crop  was  ^216,647,000.  If  this  new  and  rich 
land  had  produced  as  high  an  average  yield 
as  that  of  the  United  Kingdom,  the  harv^est 
would  have  been  increased  by  273,966,000 
bushels,  and  ^255,500,691  additional  would 
have  found  its  way  into  the  farmers'  pockets. 
In  other  words,  the  farmers  would  have  con- 
152 


THE   FARMER  AND  THE   RAILROAD 

siderably  more  than  doubled  their  returns 
from  a  single  crop.  Divided  among  the  308,141 
farms  in  these  three  states  in  1910,  this  in- 
creased harvest  would  have  brought  each 
farmer  an  additional  ^829.13,  or  a  premium  of 
^829  in  one  year  for  doing  as  thorough  and 
productive  farming  as  is  done  in  the  United 
Kingdom. 

The  business  in  which  the  farmer  is  engaged 
is  the  most  important  in  the  United  States. 
The  business  of  second  importance  is  that  of 
transportation,  which  I  represent.  The  two 
are  ver}^  closely  related,  and  the  success  of 
agriculture  means  the  success  of  the  railroad, 
for  it  hauls  what  the  farmer  produces  and  con- 
sumes. The  farmer  is  equally  dependent  upon 
the  railroad,  for  without  transportation  he 
could  not  market  his  product,  and  his  success 
depends  upon  the  regularity  and  adequacy  of 
the  transportation  available  to  him  and  the 
fairness  of  the  rates.  The  close  interrelation  of 
these  two  businesses  is  less  appreciated  than  it 
should  be.  The  farmer  should  not  be  led  into 
the  error  of  believing  that  the  railroad  is  trying 
153 


THE  TRUTH  ABOUT  THE  RAILROADS  ; 

to  charge  more  than  a  fair  and  reasonable  rate, 
for  the  success  of  each  business  in  its  own  field 
depends  upon  the  fair  and  square  treatment  it 
receives  from  the  other,  and  the  degree  of 
fairness  shown  toward  it  by  the  people. 

When  one  sees  the  ordinary  operation  of  the 
railroad  going  on  without  much  interruption, 
except  from  heavy  weather,  one  does  not  al- 
ways realize  the  great  work  that  has  been  done 
in  creating  the  railroad  machine  in  the  United 
States,  and  the  really  vast  amount  of  expense 
and  work  to  keep  it  going  day  by  day.  It 
seems  very  simple  to  see  the  passenger-trains 
run  in  and  out  of  the  station,  to  order  the 
freight-car  and  send  the  grain  to  market,  to 
telegraph  to  the  nearest  large  town  for  supplies 
and  in  twenty-four  or  forty-eight  hours  have 
them  delivered.  But  it  is  not  so  easy  and  sim- 
ple as  it  seems,  and  there  is  danger  to-day  that 
the  next  great  uplift  in  business  in  the  United 
States  will  find  the  railroads,  as  a  whole,  sorely 
taxed  to  furnish  the  transportation  needed  for 
the  commerce  of  the  country.  Why.^*  Because 
a  misdirected  public  opinion  is  demanding 
154 


THE   FARMER  AND  THE  RAILROAD 

rates  too  low,  taxes  too  high,  wages  too  high, 
service  too  elaborate,  and  there  are  not  cents 
enough  in  the  dollar  to  meet  all  these  obliga- 
tions and  still  permit  the  business  to  be  attrac- 
tive enough  so  the  man  with  the  dollar  will 
invest  it. 

Our  American  railroads  have  done  good 
work,  and  can  do  better,  and  it  is  to  the  far- 
mer's own  selfish  interest  to  see  that  they  are 
so  treated  that  they  will  be  ready  at  all  times 
to  handle  his  business.  To  be  ready  requires 
constant  expenditure. 

American  railroads  are  capitalized  at $  60,000  per  mile 

British  railroads  are  capitalized  at 275,000  per  mile 

French  railroads  are  capitalized  at 141,000  per  mile 

German  railroads  are  capitalized  at 112,000  per  mile 

Austrian  railroads  are  capitalized  at 115,000  per  mile 

Average  pay  of  American  railway  employees  is .  $668  per  year 
Average  pay  of  British  railway  employees  is. . .  251  per  year 

Average  pay  of  French  railway  employees  is.  . .  260  per  year 

Average  pay  of  German  railway  employees  is.  .  382  per  year 

Average  pay  of  Austrian  railway  employees  is..  260  per  year 

Average  charge  for  hauling  a  ton  of  freight  100  miles 

United  States $0.75 

England 2.80 

France 2.20 

Germany 1.64 

Austria 2.30 

In  the  United  States  the  railroads  haul  each 
year  2500  tons  of  freight  one  mile  for  every 
155 


THE  TRUTH  ABOUT  THE  RAILROADS 

person  in  the  country,  in  France  only  400  tons, 
and  in  Prussia  only  700  tons. 

These  few  figures  show  you  that  the  Ameri- 
can roads  perform  a  greater  freight  service 
than  the  European  roads,  at  a  much  lower 
average  charge,  pay  the  employees  much 
higher  wages,  and  have  much  less  capital  upon 
which  a  return  should  be  made.  Even  with 
this  relatively  low  capitalization,  the  Securi- 
ties Commission,  whose  report  has  just  gone 
to  Congress,  shows  that  the  return  is  less  than 
four  and  one  half  per  cent,  a  return  not  very 
satisfying  to  an  energetic  man,  no  matter 
what  his  business  may  be. 

In  North  Dakota  the  rates  on  all  grain  are 
about  one  fifth  lower  than  they  were  ten  years 
ago.  On  twelve-bushel  wheat  from  1000  acres, 
shipped  from  Bismarck  to  the  Twin  Cities  or 
Duluth,  the  saving  in  freight  to  the  farmer  is 
$1  a  ton,  or  more  than  enough  in  one  year  to 
buy  the  farmer  two  of  the  best  eight-foot 
grain-binders  with  a  couple  of  hay-rakes 
thrown  in.  In  the  country  as  a  whole,  the 
average  freight-rate  has  gone  down  about  one 
156 


THE  FARMER  AND  THE  RAILROAD 

fourth  since  1888,  very  largely  through  the 
voluntary  action  of  the  railroads  themselves. 
On  the  freight  tonnage  shipped  over  the  rail- 
roads in  1 9 10,  this  meant  the  very  large  saving 
of  ^615,928,000. 

A  bushel  of  wheat  sold  for  about  ^.62  in 
Minneapolis  in  1896.  That  ^.62  at  that  time 
paid  for  transporting  a  barrel  of  flour  161  miles 
back  into  Minnesota.  A  bushel  of  wheat  sold 
for  about  ^i  in  Minneapolis  in  191 1,  and  that 
^i  paid  for  transporting  a  barrel  of  flour  from 
Minneapolis  out  into  North  Dakota  436  miles. 
In  other  words,  the  farmer's  bushel  of  wheat  in 
191 1  would  buy  nearly  two  and  three  quarters 
times  as  much  flour-transportation  as  in  1896, 
although  the  wages  paid  by  the  railroad  and 
the  cost  of  most  materials  used  by  it  are  very 
much  higher  now  than  in  1896. 

The  present  freight  rate  is  very  small.  How 
small  it  is  can  be  better  understood  when  one 
realizes  that  for  25  cents,  what  it  costs,  accord- 
ing to  the  United  States  Department  of  Agri- 
culture, for  the  farmer  to  move  a  one-ton  load 
by  wagon  one  mile,  the  Northern  Pacific  Rail- 
157 


THE  TRUTH  ABOUT  THE  RAILROADS 

way,  at  its  average  rate  last  year,  will  move 
the  one-ton  load  27.2  miles.  For  the  cost  of  a 
two-cent  postage-stamp  it  will  move  a  ton 
about  two  and  a  quarter  miles.  For  the  cost  of 
ten  pounds  of  ten-penny  nails  it  will  move  a 
ton  44  miles;  for  the  price  of  a  No.  2  Ames 
shovel,  166  miles;  for  the  money  it  takes  to 
buy  a  good  milk-pail,  138  miles;  and  for  the 
price  of  an  ordinary  lantern-globe,  16  miles. 

In  prosperous  times  the  railroad  returns 
very  promptly  to  the  community  a  large  pro- 
portion of  all  the  money  it  collects,  in  paying 
for  labor  and  material.  About  30,000  men  are 
employed  on  the  Northern  Pacific,  at  an  an- 
nual payroll  expense  for  the  fiscal  year  ending 
June  30,  191 1,  of  about  ^23,000,000.  Materi- 
als costing  almost  ^15,500,000  were  purchased 
during  the  same  year.  Transactions  are  large, 
and  it  takes  a  great  many  passengers  and  a 
great  many  tons  of  freight  to  pay  the  bills.  For 
example,  coal  burned  by  the  Northern  Pacific 
during  the  year  ending  June  30,  1911,  cost 
^6,858,764,  and  would  have  kept  warm,  during 
the  same  period,  800,000  persons,  —  more 
158 


THE  FARMER  AND  THE  RAILROAD 

than  the  population  of  North  Dakota.  During 
the  calendar  year  of  191 1,  the  Northern  Pacific 
Railway  bought  65,398,665  feet  of  timber. 
That  was  sufficient  to  lay  a  plank  road  eight 
feet  wide  and  two  inches  thick  in  a  straight 
line  for  a  distance  of  774  miles;  in  1910,  before 
the  great  fall  in  earnings,  necessitating  the 
most  rigid  economy,  the  lumber  purchased 
would  have  been  enough  to  build  a  similar 
road  from  St.  Paul  to  Boston,  1 108  miles.  In 
one  year  the  Northern  Pacific  used  29,470 
gallons  of  paint  on  freight  equipment,  cars, 
and  stations.  That  amount  would  be  sufficient 
to  paint  627  dwelling-houses  of  average  size 
with  two  coats.  To  repaint  a  building  24  by  55 
feet  (equivalent  to  an  average  nine-room 
house)  requires  47  gallons  of  paint. 

Here  are  some  figures  about  smaller  things: 
105,000  lead-pencils  are  used  in  a  year.  That 
number  would  have  supplied  5250  school- 
children two  pencils  per  month  during  a  school 
term  of  ten  months.  4464  penholders  are 
issued  in  a  year.  249,552  pen-points  are 
issued  in  a  year.  That  number  would  have 
159 


THE  TRUTH  ABOUT  THE  RAILROADS 

supplied  4991  school-children  five  pen-points 
per  month  during  a  school  term  of  ten  months. 
1 125  gallons  of  ink  are  furnished  in  one  year. 
That  amount  would  have  supplied  5800  school- 
children with  ten  two-and-one-half-ounce  bot- 
tles of  ink  for  a  school  term  of  ten  months. 
The  total  charge  for  "stationery  and  print- 
ing" for  the  fiscal  year  ending  June  30,  191 1, 
amounted  to  ^259.968.76,  and  the  officers  are 
all  the  time  trying  to  save  on  small  items  as 
well  as  on  large  ones.  Ten  per  cent  saving  of 
this  class  of  expense  would  be  nearly  ^26,000, 
—  enough  to  build  a  mile  of  branch-line  rail- 
road in  certain  parts  of  North  Dakota.  If  the 
30,000  employees  of  the  Northern  Pacific,  by 
energetic  work  and  careful  use  of  material, 
saved  only  one  cent  a  day,  it  would  amount  in 
a  year  to  ^109,500,  —  enough  to  buy  five  good 
locomotives.  If  the  great  army  of  railroad 
employees  in  the  United  States,  more  than 
1,500,000,  should  save,  by  careful,  thorough 
work,  one  cent  a  day,  the  total  would  be  the 
large  sum  of  ^5,475,000.  A  freight  locomotive, 
suitable  for  handling  the  grain-crop,  costs, 
160 


THE  FARMER  AND  THE  RAILROAD 

delivered  at  Fargo,  a  little  more  than  ^21,000. 
The  average  receipt  to  the  railroad  for  hauling 
grain  from  North  Dakota  points  to  the  Head 
of  the  Lakes  or  the  Twin  Cities  is  1 5  cents  a 
hundredweight,  or  9  cents  a  bushel,  —  say  10 
cents  for  ease  in  calculation.  To  buy  a  loco- 
motive requires  the  gross  earnings  to  the  rail- 
road for  handling  210,000  bushels  of  wheat, 
which  at  13  bushels  to  the  acre  means  16,150 
acres. 

The  capital  requirements  of  railroads,  if 
they  are  to  keep  pace  with  the  demands  of  the 
public,  and  provide  safe,  adequate,  and  regular 
service,  will  continue  to  be  very  heavy.  Dur- 
ing the  five  years  from  1904  to  1908  invest- 
ors added  $4,167,554,569,  or  an  average  of 
$833,510,914  per  year,  necessary  to  add  to  and 
improve  the  railroads  so  that  they  could  serve 
the  public.  It  will  require  in  the  future  from 
$600,000,000  to  $1,000,000,000  a  year  for  a 
number  of  years  if  the  railroads  are  to  grow 
fast  enough  to  keep  ahead  of  the  growth  of  the 
country  and  the  demands  of  the  people.  In 
providing  this  capital,  the  railroads  have  a 
161 


THE  TRUTH  ABOUT.  THE  RAILROADS 

task  fully  as  difficult  and  serious  as  that  of  the 
farmer  in  increasing  his  product  one  per  cent 
per  acre  per  year,  and  both  tasks  must  be 
accomplished  if  we  are  to  make  the  best  use  of 
our  wonderful  resources. 

You  cannot  have  a  good  railroad  without 
good  track  and  good  equipment,  and  good  men 
to  maintain  and  operate  that  track  and  equip- 
ment. You  cannot  have  good  farms  without 
good  soil,  which  you  have  in  these  three 
states;  good  farm  equipment,  which  you  can 
get  and  should  keep  in  good  order;  good  men, 
who  will  use  that  soil  and  equipment  by  proper 
plowing  and  cultivation,  by  the  selection  of 
good,  clean  seed  instead  of  poor,  dirty  seed,  by 
intelligent  combination  of  various  crops  and 
live-stock. 

Sound  public  opinion  can  help  both  the 
farmer  and  the  railroads  in  the  important 
work  of  the  farmer  and  of  the  railroad.  It  is 
important  that  fairness  and  consideration  be 
shown  to  both:  to  the  farmer,  that  he  may 
have  every  encouragement  and  the  assistance 
of  the  best  agricultural  education,  scientific 
162 


THE   FARMER  AND  THE  RAILROAD 

research,  and  extension  work,  so  as  to  produce 
a  larger  food-supply;  and  to  the  railroad,  that 
it  may  help  the  general  prosperity  by  being 
able  to  provide  sufficient  transportation  when 
it  is  needed. 

The  people  can  have  good  farming  and  good 
railroading,  but  it  means  hard  work  and  plenty 
of  it.  Men  who  stand  off  on  one  side  and  find 
fault,  criticise,  and  embarrass  those  who  are 
really  doing  the  constructive  work  in  the  coun- 
try, by  numerous  petty,  foolish  restrictions, 
are  not  helping,  but  are  really  hindering  the 
work  of  better  farming  and  better  railroading, 
and  the  country  will  sooner  or  later  wake  up 
to  this  fact. 


VI 

AGRICULTURE,  BANKING,  AND  THE  CARRIERS 

The  three  agencies,  agriculture,  banking, 
and  the  carrier,  are  most  important  in  our 
part  of  the  country.  Upon  the  wisdom  and 
energy  with  which  they  are  conducted,  upon 
their  cooperation  each  with  the  other,  and 
upon  the  wise  and  fair  treatment  accorded 
them  by  the  public  through  the  forces  of 
Government,  depend  their  success  and  the 
continued  growth  and  success  of  our  great 
Northwestern  country. 

The  American  Northwest  is  a  great  empire, 
very  young  but  very  strong  and  full  of  oppor- 
tunity for  the  best  kind  of  human  endeavor. 
Much  has  been  done,  and  great  has  been  the 
growth  in  the  last  thirty  years,  as  some  of 
these  figures  will  show :  — 

*  Address  delivered  before  the  Minneapolis  Chapter  of 
the  American  Institute  of  Banking,  at  Minneapolis,  Minn., 
April  26,  1913. 

164 


AGRICULTURE,   BANKING,  AND  CARRIER 


States 

Admitted 
to  tlie  Union 
as  a  State 

Land 

area 

sq.  miles 

Area 
acres 

Population 

1880 

1910 

Minnesota .... 
North  Dakota 
South  Dakota. 

Montana 

Idaho 

Washington  . . 
Oregon 

1858 
1889 
1889 
1889 
1890 
1889 
1859 

80,858 
70.183 
76,863 
146,201 
83.354 
66,836 
95,607 

51.749.120 
44.917,120 
49,195.520 
93.568,640 
53.346,560 
42.775,040 
61,188,480 

780.773 

1    135.177  1 

39.159 
32,610 
75.116 
174.768 

a,o7S.708 
577.056 
583.888 
376.053 
325,594 

1,141,990 
672,76s 

Total 

619.907 

396.740.480 

1.237,603 

5.753,054 

States 

Railroad  mileage 

Banking  capital  (a) 

1880 

I9IO 

1880  (b) 

1913 

3.IS1 

}I.22S| 

106 
206 
289 
SO8 

8,669 
4.201 

3.947 
4,207 
2,178 
4.875 
2,284 

$6,539,238 
1     555.363 1 
382.700 
126.88s 
203,533 
640,657 

$  67.338.460 
18,427.504 
16.838.792 

North  Dakota 

South  Dakota 

18.834,517 

Oregon , 

Total 

548s 

30,361 

$8,448,376 

$194,937,271 

(a)  Banking  capital  includes  capital,  surplus,  and  undivided  profits. 

(b)  National  banks  only. 


This  American  Northwest  of  ours  comprises 
21  per  cent  of  the  area  of  the  whole  United 
States,  but  has  only  a  little  more  than  6  per 
cent  of  the  population.  The  railroads  have 
been  active  In  providing  facilities,  and  there 
are  only  190  people  to  the  mile  of  railroad  as 
165 


THE  TRUTH  ABOUT  THE  RAILROADS 

compared  with  382  people  for  the  United 
States  as  a  whole,  showing  that  the  railroads 
have  been  doing  their  share  in  the  develop- 
ment of  this  region.  The  banking  capital, 
from  such  figures  as  I  have  been  able  to  obtain, 
is  ^33.88  per  person  for  all  classes  of  banks  in 
the  Northwest,  and  ^18.00  for  national  banks 
only,  as  compared  with  ^45.28  for  all  classes 
of  banks  and  ^18,98  per  person  far  national 
banking  capital  for  the  whole  country.  The 
deposits  in  our  banks  are  ^941,935,000  —  not 
quite  5  per  cent  of  the  total  deposits  in  the 
United  States  of  ^19,663,857,000;  and  the 
deposit  per  capita  in  our  part  of  the  country  is 
$164.00  against  $214.00  in  the  United  States 
as  a  whole.  What  a  chance  here  for  growth ! 

I  have  spoken  of  agriculture  as  the  first  of 
the  great  agencies  the  success  of  which  is  so 
vital  to  all,  and  in  agriculture  I  include  all 
forms  of  activity  engaged  in  by  the  farmer.  It 
is  true  that  in  Minnesota,  Montana,  Wash- 
ington, Idaho,  and  Oregon  lumbering  is,  and 
in  the  last  four  states  for  a  considerable  time 
will  continue  to  be,  a  most  important  part  of 
166 


AGRICULTURE,   BANKING,  AND  CARRIER 

the  business  of  the  people.  It  is  also  true  that 
in  North  Dakota,  Montana,  Idaho,  and 
Washington,  mining  furnishes  a  field  for  the 
employment  of  labor,  capital,  and  brains,  but 
upon  the  wise  and  efficient  use  of  the  soil  de- 
pends, more  than  upon  all  else,  the  future 
prosperity  of  the  American  Northwest. 

Consider  for  a  moment  some  of  the  figures 
about  people  engaged  in  agriculture  and  the 
results  obtained  in  the  American  Northwest. 


1880 


All  land  in  farms  (acres) 23,561,289 

Improved  land  in  farms  (acres) 11,540,115 

Land  capable  of  being  farmed  and 

not  in  use  (acres) 12,021,174 

Number  of  farms I3S,97I 


124,345,917 
72,992,996 

51,352,921 
466,856 


1870 

1909 

Bushel 

Value 

not 

available 

Bushels 

Value 

Wheat 

Oats 

Barley 

Corn 

Flaxseed 

47,842,928 

32,919,797 

5,048,623 

17,020,707 

174,300 

290,802,583 
252,593,225 

97,253,571 
130,004,006 

18,731,213 

$267,708,909 
96,305,612 
47,696,131 
60,400,992 
28,031,509 

Total 

Hay  and  Forage 

103,006,355 
Tons 
2,420,913 

789,384,598 

Tons 

18,954,653 

$500,143,153 
$111,154,653 

167 


THE  TRUTH  ABOUT  THE  RAILROADS 


LIVE-STOCK  ON  FARMS 


1880 

IQIO 

Number 

Value 

not 

available 

Number 

Value 

Cattle 

1,607,915 

528,321 

1,885,490 

3,345,325 
672,315 

« 

« 
« 

7,150,802 

3,139,153 
13,078,131 

25,333,553 
3,572,890 

^172,843,915 

347,783,768 

65,923,572 

12,150,697 

32,972,560 

Horses 

Sheep 

Poultry(all  fowls) 
Hogs 

Total 

8,039,366 

52,274,529 

^631,674,512 

ORCHARD  FRUIT 

1879  Value $      857,812 

1909  Value 10,106,702 

POTATOES 

iSgg  igog 

Acres 276,242  479,024 

Bushels 29,497,186  56,237,161 

Value ^8,303,259  $19,706,596 


These  figures  are  interesting  in  showing  the 
development  in  a  term  of  years.  When  we  look 
at  them  we  are  inclined  to  "pat  ourselves  on 
the  back"  and  think  we  have  done  wonders, 
for  the  total  value  of  all  crops,  not  counting 
live-stock  and  its  products,  for  the  last  census 
168 


AGRICULTURE,   BANKING,  AND  CARRIER 

year  in  the  states  comprising  the  American 
Northwest  was  ^691,634,435.  This  Is  a  very 
large  sum  of  money,  equal  to  ^120  per  inhab- 
itant, but  to  only  ^5.50  per  acre  for  all  of  the 
farms,  and  to  ^9.50  per  acre  based  on  the 
Improved  land  in  farms.  Denmark,  with  a 
much  more  dense  population  of  183  to  the 
square  mile  as  compared  with  a  little  over  9  in 
the  American  Northwest,  has  so  Improved 
methods  of  work  and  of  agriculture  that  the 
average  annual  value  for  the  same  classes  of 
products  for  every  acre  in  that  little  kingdom 
Is  ^225.16.  Because  of  the  greater  density  of 
population,  the  production  per  person  aver- 
ages $65.33. 

Something  has  been  done  in  the  direction  of 
improving  agricultural  methods  in  this  coun- 
try, but  these  figures  show  how  far  behind  we 
are  In  making  the  best  and  most  productive 
use  of  our  soil.  Suppose  that  the  yield  per  acre 
on  improved  farms  only  was  one  half  of  the 
average  for  the  whole  of  Denmark,  then  the 
production  from  the  soil  In  the  American 
Northwest  would  amount  to  more  than 
169 


THE  TRUTH  ABOUT  THE  RAILROADS 

^8,000,000,000  of  value,  instead  of  the  present 
^691,000,000.  The  addition  of  this  vast  sum 
to  the  wealth-production  of  the  country  north 
and  west  of  here  would  mean  much  to  every 
farmer,  every  banker,  every  business  man,  and 
every  railroad  employee  in  the  country. 

These  startling  figures  emphasize  that  there 
is  a  great  responsibility  upon  the  man  engaged 
in  agriculture  in  improving  his  efficiency,  and 
also  a  responsibility  upon  all  in  seeing  that 
hand  in  hand  with  the  development  of  agri- 
culture shall  go  proper  development  of  the 
banking  and  transportation  interests  of  the 
country. 

How  about  the  banking  capacity  of  the 
American  Northwest.''  The  growth  of  the 
banks  in  these  states  from  less  than  ^9,000,000 
capital  in  1880  to  $195,000,000  in  1912  shows 
clearly  that  this  agency  has  been  keeping  pace 
with  the  growth  of  the  country,  and  in  the 
whole  United  States  the  growth  has  been  from 
$825,000,000  in  1880  to  $4,164,914,181  in 
191 2.  To-day  there  are  more  than  3360  banks 
in  the  American  Northwest,  taking  care  of 
170 


AGRICULTURE,   BANKING,  AND  CARRIER 

nearly  ^1,000,000,000  of  the  people's  money 
and  helping  the  farmer,  the  business  man,  and 
the  railroad  employee  carry  on  their  daily 
lives.  In  the  United  States  as  a  whole,  the 
deposits  have  increased  from  $2,201,900,000  in 
1880  to  $19,663,857,000  in  1912.  The  banker 
in  his  business  meets  many  people  and  has  a 
chance  to  direct  attention  to  the  right  way  of 
solving  some  of  the  difficulties  that  confront 
the  country. 

What  about  the  carrier.^  What  has  been 
accomplished  in  creating  that  agency.^  In  our 
part  of  the  country,  the  principal  carrier  for 
any  distance  is  the  railroad,  and  to  a  very  large 
extent  this  is  true  in  the  United  States  as  a 
whole.  Without  efficient  railroads  the  country 
cannot  develop  any  more  than  it  can  develop 
without  efficient  agriculture  and  safe  and 
sound  banks.  Here  are  a  few  figures  that  will 
show  what  the  owners  of  the  railroad  have 
done  in  producing  a  transportation  machine  to 
handle  the  people  and  products  of  the 
country:  — 

The  American  railroad  system  has  been 
171 


THE  TRUTH  ABOUT  THE  RAILROADS 

created  in  its  present  form  since  the  Civil  War, 
and  practically  built  and  rebuilt  within  the  last 
forty  years.  The  railroad-owner  has  provided, 
in  round  figures,  250,000  miles  of  railroad, 
370,000  miles  of  track,  62,000  locomotives, 
51,000  passenger-cars,  and  2,200,000  freight- 
cars.  The  fair  present  value  of  this  tremen- 
dous piece  of  machinery  is  probably  at  least 
^18,000,000,000,  and  in  keeping  it  in  order  and 
in  operating  it  about  1,700,000  men  are  em- 
ployed with  an  annual  payroll  of  nearly 
^1,300,000,000. 

The  securities  representing  this  value  are 
held  by  hundreds  of  thousands  of  individuals, 
and  also  by  insurance  companies,  savings 
banks  and  trust  companies,  hospitals,  churches, 
and  colleges;  and  the  people  as  a  whole  have  as 
vital  an  interest  in  maintaining  the  credit  and 
prosperity  of  the  railroads  as  they  have  in 
maintaining  the  solvency  of  the  banks.  It  is 
stated  on  good  authority,  that  the  life-insur- 
ance companies  doing  business  in  the  state 
of  New  York  hold  one  eighth  of  the  entire 
railroad-bond  issue  of  the  country.  There  are 
172 


AGRICULTURE,   BANKING,  AND   CARRIER 

about  20,000,000  policy-holders  in  these  com- 
panies, and  they  are  very  much  interested  in 
the  soundness  of  this  great  investment.  There 
are  16,108  holders  of  Northern  Pacific  stock, 
of  which  5675,  or  35  per  cent,  are  women, 
and  presumably  the  same  relation  obtains  in 
other  large  railroads. 

This  great  piece  of  machinery  handled  last 
year  33,510,673,000  passengers  one  mile,  and 
carried  267,313,687,000  tons  of  freight  one 
mile.  These  figures  are  so  vast  that  the  human 
mind  cannot  comprehend  them.  But,  if  we  as- 
sume that  there  are  92,000,000  people  in  the 
United  States,  it  means  that  the  railroads  pro- 
vided a  trip  of  364  miles  and  hauled  2905  tons 
of  freight  one  mile  for  every  man,  woman,  and 
child  in  the  United  States. 

People  from  all  over  the  world  come  to 
examine  the  American  railroads  and  the  Amer- 
ican railroad  system,  and  go  away  in  wonder 
because  the  American  railroads  perform  a 
greater  service  per  mile  of  track  than  those  of 
any  other  nation,  at  lower  rates,  and  pay  their 
employees  higher  wages. 
173 


THE  TRUTH  ABOUT  THE  RAILROADS 

The  following  are  the  average  rates  per  ton 
per  mile  for  handling  freight  in  some  of  the 
important  countries  for  the  last  years  for  which 
figures  are  obtainable :  — 

United  Kingdom 2.33  cents 

Germany 1.41 

France 1. 39 

Russia 95 

Austria 1.45 

Hungary 1.3 1 

Denmark 2.16 

Holland 1. 32 

Switzerland 2.91 

United  States 741 

And  here  are  some  figures  for  capitalization 
per  mile  of  road :  — 

United  Kingdom $275,000 

Germany 1 14,000 

France 144,000 

Russia,  including  Siberia 81,000 

Austria 118,000 

Hungary 67,000 

Denmark 58,000 

Holland 82,000 

Switzerland 1 17,000 

United  States 60,000 

And  here  are  the  average  wages  paid  railroad 
employees  per  year:  — 

United  Kingdom $270 

German  Empire 388 

France 260 

Russian  Empire r^6 


AGRICULTURE,   BANKING,  AND  CARRIER 

Austria $277 

Hungary 283 

Italy 287 

Switzerland 292 

United  States 733 


People  who  do  not  study  the  figures  often 
look  upon  the  railroad  as  a  great  piece  of 
machinery  with  an  unlimited  ability  to  obtain 
money  in  indefinite  amounts  for  increasing  its 
capacity  and  Improving  the  quality  of  the  ser- 
vice. The  transactions  are  so  large  and  the 
figures  run  into  so  many  millions  that  the 
impression  prevails  that  the  railroads  must  be 
very  rich,  and  that  any  failure  or  refusal  of  the 
management  to  do  the  things  that  people 
want  done  is  due  to  an  unwillingness  and  to  a 
spirit  of  parsimony,  when  as  a  matter  of  fact  it 
is  because  of  the  absolute  inability  of  the 
owners  and  managers  to  obtain  the  money 
from  any  source  whatsoever. 

The  equipment  of  the  railroads  alone  repre- 
sents at  least  ^3,500,000,000,  and  that  equip- 
ment must  be  maintained  in  good  order,  that 
it  may  perform  the  duty  imposed  upon  it  by 
the  public.  It  must  be  improved  in  quality  and 
175 


THE  TRUTH  ABOUT  THE  RAILROADS 

quantity  year  by  year.  The  Imagination  of  the 
people  is  fired  by  the  building  of  the  Panama 
Canal,  and  It  is  thought  of  as  a  great  work;  but 
the  railroad  equipment  for  the  use  of  the  peo- 
ple is  worth  at  least  eight  times  the  cost  of  that 
canal,  and  the  annual  cost  of  repairing  and 
replacing  that  equipment,  about  ^446,000,000 
in  19 1 2,  is  as  much  as  the  cost  of  the  canal.  To 
maintain  a  high  standard  of  equipment  for  the 
use  of  the  American  people  is  fully  as  impor- 
tant as  to  have  the  Panama  Canal,  and  yet 
rarely  is  any  suggestion  made  to  encourage 
the  railroads  in  the  work  they  are  trying  to  do 
and  to  help  them  to  make  a  better  use  of  that 
equipment  or  to  obtain  rates  that  will  enable 
them  to  have  adequate  facilities  and  adequate 
equipment  for  the  fast-growing  business  of  the 
country. 

The  railroads  are  struggling  all  the  time  to 
perform  their  work  with  less  loss  and  damage 
to  life  and  property,  and  few  people  not  in  the 
business  realize  the  vast  capital  expenditures 
that  should  be  made  in  order  to  equip  the  rail- 
roads with  modern  safety  appliances  that  help 
176 


AGRICULTURE,   BANKING,  AND  CARRIER 

to  prevent  accidents.  Such  appliances  will  not 
entirely  stop  accidents,  because  In  the  last 
analysis  the  human  equation  Is  the  test,  and 
not  until  public  opinion  holds  to  a  rigid  ac- 
count railroad  officers  and  employees  who  are 
unfaithful  to  their  duty  will  accidents  be  mini- 
mized, In  spite  of  all  the  appliances  that  mod- 
ern science  may  adopt.  Statistics  show  that 
about  one  twelfth  of  the  accidents  on  the 
American  railroads  are  due  to  causes  that  can 
be  remedied  by  mechanical  appliances  for  the 
protection  of  trains ;  the  other  eleven  twelfths 
come  from  causes  that  are  common  to  all 
classes  of  business. 

Much  has  been  said  about  accidents  in  this 
country,  as  If  we  were  very  far  behind  other 
countries  in  this  respect.  Look  at  the  figures 
for  a  moment :  — 

In  Europe,  on  206,987  miles  In  19 10  there 
were  killed  554  passengers,  2607  employees, 
and  4465  other  persons,  or  a  total  of  7626.  In 
the  United  States  on  248,888  miles  reported 
in  191 2,  there  were  killed  318  passengers, 
3235  employees,  and  6632  other  persons,  or  a 
177 


THE  TRUTH  ABOUT  THE  RAILROADS 

total  of  10,185.  Included  in  the  figures  for  the 
United  States  were  5434  trespassers,  and  it  is 
well  known  that  in  most  European  countries 
the  public  realize  they  have  no  right  to  trespass 
on  railroad  property,  while  in  this  country, 
except  in  a  few  states,  people  think  the  rail- 
road right  of  way  can  be  used  as  a  highway, 
with  the  result  that  there  are  about  14  tres- 
passers a  day  killed  in  the  United  States. 
These  trespassers  not  only  lose  their  own  lives, 
but  endanger  most  seriously  the  lives  of  the 
employees  and  passengers  on  the  trains. 

Absolute  obedience  is  not  encouraged 
enough  in  American  education  or  in  the  Ameri- 
can home,  and  in  spite  of  everything  that  rail- 
road managers  can  do,  it  is  very  difficult  to 
secure  absolute  obedience  to  reasonable  rules. 

Nearly  $300,000,000  is  needed  to  install  suit- 
able block  signals  on  the  American  railroads, 
which  means  an  annual  charge  for  mainten- 
ance and  depreciation  of  about  $75,000,000. 

The  revenue  of  the  railroads  is  collected  in 
the  main  from  the  handling  of  property  and 
passengers,  and  they  cannot  pay  out  more  than 
178 


AGRICULTURE,   BANKING,   AND   CARRIER 

they  take  in.  In  191 2,  of  every  dollar  that  the 
railroads  received,  the  following  disposition 
was  made :  — 

Labor  direct 44-17  cents 

Fuel  and  oil,  70  per  cent  labor 8.93 

Material,  supplies,  and  miscellaneous  expenses 14.06 

Loss  and  damages 2.20 

Taxes 4.21 

Rents  for  leased  roads 4.41 

Interest  on  debt 13-43 

Total 91.41 

Balance 8.59 

100.00 

Of  this  balance  3.75  cents  was  for  better- 
ments and  deficits,  and  4.84  cents  for  divi- 
dends. In  other  words,  of  the  dollar  collected 
there  had  to  be  paid  out  91.41  cents  for  those 
things  that  were  absolutely  necessary  for 
maintaining  and  operating  the  property  and 
paying  taxes  and  interest,  leaving  only  the 
small  balance  of  8.59  cents  for  improvements 
and  dividends. 

Without  effective  banking  the  great  railroad 

systems  of  the  country  could  not  have  been 

developed  to  the  extent  that  they  have  been, 

and  one  of  the  great  problems  confronting  the 

179 


THE  TRUTH  ABOUT  THE  RAILROADS 

carriers  to-day  Is  that  of  making  both  ends 
meet,  and  having  enough  money  left  over  so 
that  bankers  will  be  able  to  obtain  from  inves- 
tors new  funds  to  Increase  the  facilities.  It  is  a 
matter  of  common  knowledge  and  evident  In 
the  lives  of  all  of  us  that  expenses  and  the  cost 
of  living  are  greater  to-day  than  a  few  years 
ago,  and  the  same  causes  that  affect  the  indi- 
vidual affect  the  great  transportation  compan- 
ies. The  demands  of  labor,  the  Increased  cost  of 
material,  ever-growing  taxes,  many  new  fed- 
eral and  state  laws  unnecessarily  increasing 
the  payroll,  requirements  of  prosperous  people 
for  better  service,  all  tend  to  increase  the  rail- 
road expense,  but  so  far  with  no  Increase  In 
rates.  As  a  result,  the  balance  left  to  pay  a 
return  upon  Investments  Is  not  the  amount 
that  It  should  be  to  enable  the  banker  to  say 
to  his  client,  "Lend  me  your  money,  that  I 
may  furnish  It  to  the  railroads  so  they  can  go 
on  with  their  work." 

Figures  compiled  from  the  reports  of  the 
Interstate    Commerce    Commission    for    the 
fiscal  years  1907  and  191 1  are  given  below:  — 
180 


AGRICULTURE,  BANKING,  AND  CARRIER 

1911  1907 

Cost  of  road  and  equipment..  .*  ^14,984,796,837  $12,940,379,220 

Revenues 2,852,854.721  2,570,795,058 

Expenses 2,005,528,462  1,737,698,201 

Balance 847,326,259         833,096,857 

Taxes 102,657,157  79,640,013 

Operating  income 744,669,102  753,456,844 

Increased  cost  of  road  com- 
pared with  1907 2,044,417,617 

Decrease  in  income 8,787,742 

*  Cost,  taken  from  balance  sheets,  is  far  less  than  present  real  value. 

In  Other  words,  with  ^2,000,000,000  new  capi- 
tal put  into  the  business  there  was  nearly 
^9,000,000  less  return.  How  long  will  people 
go  on  putting  money  into  a  business  that  makes 
no  return  on  the  new  capital  required? 

In  1900  the  value  of  farm  property  In  the 
States  of  the  American  Northwest  was 
^1,843,409,554,  and  in  1910  it  was  $5,436,- 
255,070,  an  increase  of  194.9  per  cent. 

1900  1910 

Minnesota $788,684,642  $1,476,41 1,737 

North  Dakota 255,266,751  974,814,205 

South  Dakota 297,525,302  1,166,096,980 

Montana 117,859,823  347,828,770 

Idaho 67,271,202  305,317,185 

Washington 144,040,547  637,543,411 

Oregon 172,761,287  528,243,782 

$1,843,409,554    $5,436,256,070 
181 


THE  TRUTH  ABOUT  THE  RAILROADS 

The  capital  value  represented  by  agriculture 
in  the  United  States  for  19 lo  was  estimated 
at  ^40,991,449,000,  and  the  returns  from 
agriculture  for  various  periods  are:  13.8  per 
cent  in  1890;  16.3  per  cent  in  1900;  16.8  per 
cent  in  1905.  The  farmer  of  the  American 
Northwest  has  prospered  as  much  as  in  any 
other  section,  and  his  property  has  increased 
largely  in  value,  and  presumably  he  has  made 
as  handsome  a  return  on  that  value  as  for  the 
average  of  the  United  States. 

The  capital,  surplus,  and  undivided  profits 
of  all  the  banks  of  the  United  States  for  19 12 
are  given  as  ^4,164,914,181.  The  net  earnings 
In  the  same  periods  for  national  banks,  and 
not  including  state  and  private  banks,  which 
are  said  to  do  as  well,  if  not  better  than  na- 
tional banks,  based  on  capital  and  surplus, 
were  6.66  per  cent  in  1880;  8.63  per  cent  in 
1890;  8.20  per  cent  in  1900;  9.67  per  cent  in 
19 10.  Or,  if  based  upon  capital  alone,  the  net 
earnings  were:  8.36  per  cent  in  1880;  11.48 
per  cent  in  1890;  11.60  per  cent  in  1900;  16 
per  cent  in  19 10. 

182 


AGRICULTURE,   BANKING,  AND  CARRIER 

The  capitalization  of  the  railroads  in  1910, 
represented  by  securities  in  the  hands  of  the 
pubHc,  was  ^14,338,575,940.  The  return  on 
capital  invested  in  railroads  was  investigated 
carefully  by  the  Railroad  Securities  Com- 
mission, with  President  Hadley  of  Yale  at  the 
head,  whose  report  was  sent  to  Congress  by 
the  President  on  December  8,  191 1.  What  the 
Commission  says  in  that  report  tells  the 
story :  — 

"Neither  the  rate  of  return  actually  received 
on  the  par  value  of  American  railroad  bonds 
and  stocks  to-day,  nor  the  security  which  can 
be  offered  for  additional  railroad  investments 
in  the  future,  will  make  it  easy  to  raise  the 
needed  amount  of  capital.  The  rates  of  inter- 
est and  dividends  to  outstanding  bonds  and 
stocks  of  American  railroads  is  not  quite  four 
and  one  half  per  cent  in  each  case." 

And  again:  — 

"A  reasonable  return  is  one  which,  under 
honest  accounting  and  responsible  manage- 
ment, will  attract  the  amount  of  investors' 
money  needed  for  the  development  of  our  rail- 
183 


THE  TRUTH  ABOUT  THE  RAILROADS 

road  facilities.  If  rates  are  going  to  be  reduced 
whenever  dividends  exceed  current  rates  of 
interest,  investors  will  seek  other  fields  where 
the  hazard  Is  less  or  the  opportunity  greater." 

To  quote  again  from  this  report:  — 

"The  necessary  development  of  railroad 
facilities  is  now  endangered  by  the  reluctance 
of  investors  to  purchase  new  issues  of  railroad 
securities  in  the  amounts  required.  This 
reluctance  Is  likely  to  continue  until  the 
American  public  understands  the  essential 
community  of  interest  between  shipper  and 
Investor,  and  the  folly  of  attempting  to  protect 
the  one  by  taking  away  the  rewards  of  good 
management  from  the  other." 

The  evidence  all  Indicates  that  the  returns 
upon  capital  invested  from  both  agriculture 
and  banking  have  been  much  more  attractive 
to  the  Investor  than  have  the  returns  upon 
capital  advanced  to  the  carrier,  and  the  Securi- 
ties Commission  points  out  very  clearly  that 
the  returns  upon  railroad  investment  are  not 
enough  to  attract  the  needed  capital. 

I  have  tried  to  give  you  a  few  of  the  im- 
184 


AGRICULTURE,   BANKING,  AND   CARRIER 

portant  facts  about  agriculture,  banking,  and 
the  carrier,  —  the  A,  B,  C  of  the  alphabet  of 
progress  in  the  American  Northwest,  If  these 
three  agencies  are  not  efficient  and  progres- 
sive, then  there  will  be  indifferent  progress  in 
merchandising,  in  manufacturing,  and  in  the 
development  of  the  more  complex  forms  of 
human  effort  that  do  not  flourish  until  there  is 
some  surplus  of  brains,  energy,  and  capital 
over  and  above  the  imperative  needs  of  the 
simpler  forms  of  business. 

Following,  and  to  some  extent  coincident 
with  the  success  of,  this  A,  B,  and  C,  come  the 
things  every  man  works  for,  and  hopes  for,  — 
better  homes,  better  care  of  women  and  chil- 
dren in  schools,  hospitals,  and  churches,  and 
better  facilities  for  the  general  welfare  and  up- 
lifting of  society.  We  all  of  us  want  these 
things,  and  we  all  want  agriculture,  banking, 
and  the  carrier  to  go  on  with  their  work,  and  to 
succeed.  The  practical  question  is.  What  can 
any  one  of  us  do  to  help  out,  that  we  are  not 
doing.'* 

It  is  gratifying  that  the  country  generally  is 
185 


,  THE  TRUTH  ABOUT  THE  RAILROADS 

awakening  to  the  fact  that  agriculture  is  an 
occupation  that  needs  the  best  attention  and 
the  best  brains  that  can  be  given  to  it.  Too 
long  has  the  farmer's  life  been  pictured  as 
unattractive,  unremunerative,  and  something 
that  the  young  men  and  young  women  should 
shun.  Lately,  however,  the  Government,  the 
bankers,  the  carriers,  and  people  generally 
have  awakened  to  the  fact  that  It  Is  important 
to  Improve  living  conditions  on  the  farm  and 
to  increase  the  productivity  of  the  farm. 
Progress  has  been  made,  but  much  remains  to 
be  done  to  help  and  encourage  the  farmer  and 
his  family  and  to  Increase  the  product  from 
each  acre. 

For  many  years  the  attention  of  thoughtful 
men  has  been  directed  to  our  monetary 
policy,  and  the  mantle  of  government  protec- 
tion has  been  thrown  around  our  banking 
methods,  and  every  reasonable  effort  made  to 
safeguard  that  important  business.  There  are 
some  weak  spots  in  our  system  which  It  is 
hoped  will  be  cured  in  due  time. 

The  third  great  agency,  that  of  the  carrier, 
1 86 


AGRICULTURE,   BANKING,   AND   CARRIER 

has  for  forty  years  struggled  to  create  a  good 
transportation  machine,  much  of  the  time 
without  helpful  support  from  either  the  public 
or  the  Government,  and  of  late  years  in  the 
face  of  restrictive  and  harassing  legislation. 
That  the  business  has  succeeded  to  the  extent 
that  it  has,  has  been  due  to  the  wonderful 
growth  of  the  United  States,  which  has  carried 
forward  all  classes  of  business  to  a  fair,  and  in 
some  cases  a  high,  degree  of  prosperity. 

Now  a  problem  is  confronting  the  American 
people  that  is  just  as  important  to  their  future 
welfare  as  is  the  success  of  agriculture,  or  of 
our  monetary  system.  When  the  silver  ques- 
tion was  rampant,  many  people  said  they  did 
not  care  about  that,  because  it  was  a  question 
for  the  bankers,  and  it  did  not  affect  them; 
they  learned  later  on,  however,  that  the  policy 
of  our  financial  system  affected  every  man 
from  one  end  of  the  country  to  the  other. 
Many  people  say  now  that  in  some  miraculous 
way  the  railroads  are  going  to  provide  all  the 
facilities  that  are  necessary  for  the  expanding 
country,  and  that  it  is  their  business  to  get  the 
187 


THE  TRUTH  ABOUT  THE  RAILROADS 

money,  spend  it,  and  have  adequate  facilities. 
The  inability  or  failure  in  providing  these  facil- 
ities will  sooner  or  later  aifect  every  one  from 
one  end  of  the  country  to  the  other,  and  it  Is 
just  as  much  to  the  interest  of  the  farmer,  the 
banker,  and  the  business  man  to  see  that  fair 
treatment  is  accorded  to  the  railroads,  so  that 
money  will  be  attracted  to  that  business,  as  It 
is  to  have  sound  agricultural  practice  and  a 
sound  banking  policy. 

There  is  one  feature  of  railroad-operation 
that  is  not  often  considered,  and  that  is 
the  question  of  manning  this  great  machine. 
There  are  many  high-minded,  earnest  men  In 
all  departments  of  railroad  work  who  are  giving 
the  best  that  is  In  them  in  trying  to  do  their 
duty  to  the  owners  of  the  property  and  to  the 
public.  It  is  an  unfortunate  fact,  however, 
that  of  late  years  young  men  In  the  United 
States  who  are  fortunate  enough  to  be  trained 
In  the  best  schools  and  colleges  for  business 
and  professional  life,  and  who  have  the  liberty 
of  choice  In  selecting  their  life  work,  do  not 
select  the  transportation  business,  so  that  the 
1 88 


AGRICULTURE,   BANKING,  AND  CARRIER 

supply  of  trained  railroad  officers  is  not  as 
great  as  it  should  be  for  the  magnitude  of  the 
business.  Experienced  men  of  high  character 
in  the  management  of  the  railroads  give  confi- 
dence to  the  investor  and  to  the  public,  and 
they  are  more  important  than  money,  engines, 
tracks,  and  physical  facilities,  if  progress  in 
the  right  direction  is  to  be  made.  It  is  very 
much  to  the  interest  of  the  future  growth  of 
the  United  States  to  have  the  railroad  business 
offer  such  rewards  to  the  investor  that  money 
will  flow  freely  into  building  up  the  transport- 
ation machine,  and  to  offer  such  attractions 
to  the  best  talent  of  the  country,  that  men  will 
engage  in  the  business  as  freely  as  they  engage 
in  banking,  in  law,  in  medicine,  in  manufac- 
turing, and  in  agriculture. 

There  is  the  closest  connection  between  the 
railroads  and  the  bankers,  because  the  railroads 
must  turn  to  the  banking  fraternity  to  help 
them  in  getting  funds  to  carry  on  the  great 
work  of  providing  sufficient  transportation. 
Is  it  not  to  the  interest  of  bankers  to  try  so  to 
shape  public  opinion  that  not  only  will  the 
189 


THE  TRUTH  ABOUT  THE  RAILROADS 

particular  business  in  which  they  are  engaged 
receive  fair  treatment,  and  agriculture  receive 
help  and  fair  treatment,  but  the  great  business 
of  the  carrier  will  receive  like  encouragement 
and  fair  treatment,  so  that  the  capital  now 
invested  in  that  important  business,  and 
needed  so  much  in  the  future,  will  receive  a 
return  sufficient  to  justify  bankers  in  recom- 
mending and  obtaining  the  funds  to  be  used 
for  expanding  the  facilities  of  this  great  coun- 
try? I  believe  that  it  is,  and  that  every  one 
can  do  something  in  his  own  life  to  foster  a 
better  understanding  and  a  saner  public  opin- 
ion about  these  questions  so  vital  to  all. 


VII 

TRANSPORTATION  IN  NEW  ENGLAND » 

On  August  9,  191 3,  there  was  reprinted  in 
the  "Outlook"  "A  Little  Catechism  on 
Money."  One  of  the  questions  asked  is, 
"What  are  the  things  which  are  exchanged 
in  modern  commerce?"  The  answer  given  is, 
"Those  essential  things  which  are  bought  and 
sold,  as  we  say,  in  modern  commerce  are  food, 
water,  clothing,  shelter  from  inclemency  of 
weather  and  climate,  human  intelligence  or 
skill,  and  human  strength  or  labor." 

The  writer  of  the  catechism  failed  to 
mention  one  very  vital  element  in  modern 
commerce,  namely,  transportation,  unless  he 
included  it  under  the  general  terms  "Human 
intelligence  or  skill  and  human  strength  or 
labor";  all  of  which  are  needed  of  the  best 
quality  in  order  to  produce  the  high-grade 

^  Address  delivered  before  the  Boston  Chamber  of  Com- 
merce, September  30,  191 3. 

191 


THE  TRUTH  ABOUT  THE  RAILROADS 

transportation  that  in  these  modern  days  is  so 
necessary  to  the  health  and  prosperity  of  all, 
and  that  is  so  vitally  necessary  here  in  New 
England. 

Professor  James  Mark  Baldwin,  in  his  book 
"The  Individual  and  Society,"  says,  "Busi- 
ness has  to  do  with  the  production  of  and  dis- 
tribution of  valuable  things  —  money,  uten- 
sils —  anything  for  which  there  is  a  demand  in 
society,  on  which  society  or  some  individuals 
of  it  set  value";  and  again,  "To  produce  such 
things  in  response  to  the  demand  and  to 
distribute  them  to  those  from  whom  the 
demand  comes  is  the  undertaking  of  business." 
The  transportation,  or  the  distribution,  of  the 
numerous  products  of  New  England  and  of  her 
food  and  fuel  is  a  most  important  business,  not 
only  in  itself  but  in  its  relations  to  all  other 
forms  of  business  and  to  society  generally. 
Some  of  my  friends  in  New  England,  New 
York,  and  Philadelphia  have  asked  me  to  come 
back  to  the  East  and  to  help  in  the  develop- 
ment of  this  great  transportation  business,  and 
I  am  very  glad  to  come,  although  I  realize 
192 


TRANSPORTATION  IN  NEW  ENGLAND 

that  I  am  taking  up  a  heavy  load  and  trying 
to  solve  a  difficult  problem. 

My  experience  for  thirty-three  years  has 
been  west  of  the  Mississippi  River,  where 
some  of  the  conditions  are  very  different  from 
those  in  New  England,  but  where  some  are 
much  the  same.  At  points  in  the  West  there 
are  complicated  and  congested  terminals,  — 
Chicago,  St.  Louis,  Kansas  City,  Omaha, 
Denver,  St.  Paul,  Minneapolis,  Duluth  and 
Superior,  Spokane,  Portland,  Tacoma,  and 
Seattle.  In  places  the  trackage  is  insufficient 
for  the  number  of  trains  moving  over  it. 
There  are  branch  lines  that  cannot  earn 
enough  to  pay  expenses,  to  say  nothing  of 
taxes  and  a  return  on  their  value.  There  is 
complaint,  and  discussion  in  communities 
about  facilities,  rates,  and  service.  All  of  these 
conditions  exist  in  New  England. 

The  growth  that  has  come  and  is  coming  to 
that  great  area  west  of  the  Mississippi  River 
will  have  a  reflex  action  and  a  great  effect  on 
New  England,  and  there  are  certain  facts  that 
are  most  interesting.  Minnesota,  where  I  have 
193 


THE  TRUTH  ABOUT  THE  RAILROADS 

lived  for  the  past  ten  years,  Is  a  beautiful  State 
with  many  natural  resources.  It  Is  large 
enough  to  Include  within  Its  boundaries  all  of 
the  New  England  states;  In  that  state  the  last 
census  reports  2,075,000  people  as  compared 
with  6,550,000  In  the  New  England  states. 
The  beautiful  states  of  Idaho,  Washington, 
and  Oregon,  only  just  beginning  their  majestic 
development,  have  an  area  of  250,000  square 
miles  and  less  than  3,000,000  people.  Austria- 
Hungary  has  261,000  square  miles  and  nearly 
50,000,000  people.  Minnesota,  Idaho,  Wash- 
ington, and  Oregon  are  capable  of  supporting, 
in  due  time,  as  dense  a  population  as  New  Eng- 
land, and  New  England  can  support  as  dense  a 
population  as  Austria-Hungary. 

What  does  this  mean.^  It  means  that  the 
West  must  and  will  grow,  but  It  also  means 
that  New  England  must  and  will  grow.  A 
virile,  prosperous,  and  happy  people  in  the 
Mississippi  Valley  and  between  there  and  the 
Pacific  Coast  means  an  Increasing  purchasing 
power  for  those  things  that  New  England 
makes,  and  an  Increasing  demand  upon  her 
194 


TRANSPORTATION  IN  NEW  ENGLAND 

intellectual  and  financial  capacity.  With 
the  growth  of  New  England  every  agency 
that  is  connected  with  and  necessary  to  that 
growth  must  grow  too.  It  means  an  increas- 
ing number  of  her  sons  and  daughters  to 
return  each  year  to  her  schools  and  colleges, 
and  to  enjoy  her  beautiful  seacoast,  lovely 
valleys,  and  picturesque  hill  and  mountain 
country. 

When  I  decided  to  come  back  to  my  old 
home  in  New  England,  some  of  my  friends 
said,  Why  leave  this  great  and  growing  West 
for  a  country  that  is  developed  and  finished  f 
I  told  them  that  in  my  judgment  there  was 
going  to  be  just  as  much  growth  and  develop- 
ment in  New  England  in  the  next  twenty-five 
years  as  anywhere  else,  and  there  will  be  if  the 
intellectual  and  financial  ability  of  the  men  in 
New  England  can  cooperate  unselfishly  with 
that  end  in  view.  I  told  them  that  I  had  a 
great  love  for  New  England,  and  that,  strong 
as  was  my  feeling  for  the  West,  the  idea  of 
spending  the  last  years  of  my  life  here,  where 
my  relatives  and  lifelong  friends  are,  and 
195 


THE  TRUTH  ABOUT  THE  RAILROADS 

where  my  children  are  going  to  school  and 
college,  appealed  very  strongly  to  me. 

There  is  an  old  saying  that  reads:  "Man's 
work  lasts  till  set  of  sun;  woman's  work  is 
never  done."  This  is  true  about  the  railroad. 
Its  work  is  never  done.  Men  may  think  they 
have  provided  sufficient  transportation  facili- 
ties for  years  to  come,  but  the  growth  of  the 
country  is  so  great  that  things  that  looked  far 
too  big  a  few  years  ago  are  far  too  small  now. 
For  every  dollar  of  gross  earnings  produced  by 
the  railroad  there  is  a  value  in  the  plant  used 
of  nearly  ^6  upon  which  owners  are  entitled  to 
a  fair  return.  For  every  increase  of  ^i  in  gross 
earnings  which  reflects  the  increase  in  general 
business  in  the  country  there  must  be  provided 
by  some  one  more  than  $6  of  new  capital  for 
increased  and  improved  facilities.  For  New 
England  to  grow  as  she  will  in  common  with 
the  rest  of  the  country  she  must  have  a  com- 
prehensive, adequate,  and  safe  system  of 
transportation.  The  new  capital  needed  in 
this  section  for  each  increase  oi  $i  of  gross 
earnings  will  be  greater  than  the  average  in  the 
196 


TRANSPORTATION  IN  NEW  ENGLAND 

United  States  because  of  more  perfect  and 
luxurious  service  demanded. 

As  indicating  the  large  sums  needed  by  the 
railroads  in  the  United  States,  it  is  estimated 
that  nearly  ^700,000,000  will  be  required  to 
replace  wooden  cars  with  steel;  to  equip  the 
railroads  with  suitable  signals  will  cost  nearly 
^300,000,000;  or  nearly  ^1,000,000,000  for 
these  two  moves  in  the  direction  of  safety; 
and  in  addition  a  great  amount  of  money 
should  be  spent  for  better  track,  bridges, 
stations,  grade-separation,  etc. 

To  have  a  safe,  adequate,  and  smooth- 
running  transportation  machine  in  New  Eng- 
land is  just  as  important  to  her  future  growth 
as  to  have  adequate  banking  facilities,  ade- 
quate commercial  organizations,  and  a  sensi- 
ble, sane,  and  honest  public  opinion  that  will 
be  reflected  in  a  government  that  will  not  be 
swayed  by  the  whims,  prejudice,  or  fads  of 
the  moment.  To  perfect  that  transportation 
machine,  to  keep  it  ready  to  serve,  to  operate 
it  safely  and  economically  and  in  harmony 
with  the  public,  is  a  very  interesting  and  com- 
197 


THE  TRUTH  ABOUT  THE  RAILROADS 

plicated  problem,  worthy  of  the  best  intellect- 
ual effort  of  any  man. 

It  was  my  good  fortune  to  work  for  twenty- 
three  years  on  the  Chicago,  Burlington  & 
Quincy,  first  pushed  out  into  the  West  by  one 
of  the  pioneer  railroad  men  of  the  world  and 
one  of  that  fine  type  of  men  of  whom  New 
England  has  produced  so  many,  —  John  Mur- 
ray Forbes.  And  then,  later  on,  that  road  was 
further  developed  to  a  very  high  degree  by 
another  very  fine  type  of  New  England  man 
who  had  one  of  the  ablest  intellects  in  this 
country  and  who  devoted  forty  years  of  his 
life  to  the  work,  —  Charles  Elliott  Perkins. 
He  realized  to  a  very  remarkable  degree  the 
fact  that,  in  the  long  run,  the  railroad  that  is 
selling  transportation  and  the  people  who  are 
buying  transportation  must  consider  the  inter- 
ests of  each  other  and  work  together.  He  also 
realized  that  character,  high  purpose,  scrupu- 
lous honesty,  not  only  as  to  money  but  as  to 
statement  and  point  of  view,  were  absolutely 
essential  to  the  real  welfare  of  the  country  and 
of  the  railroads  that  were  trying  to  serve  it. 
193 


TRANSPORTATION  IN  NEW  ENGLAND 

Yet,  with  all  this,  he  was  tenacious  and  able  In 
safeguarding  the  rights  of  the  owners  who  had 
risked  their  money  In  building  railroads,  and 
he  pointed  out  on  many  occasions  the  fact, 
stated  by  Professor  Baldwin,  that  the  distribu- 
tion of  products  or  things  was  business  just  as 
much  as  the  production  of  things  was  business. 
Some  of  the  difficulties  and  Inadequacies  of  the 
transportation  machine  of  the  United  States 
to-day  are  the  result  of  drifting  away  too  far 
from  the  idea  that  transportation  Is  business, 
which,  in  the  long  run,  must  be  governed  by 
the  same  great  human  and  natural  laws  that 
affect  all  human  affairs. 

In  saying  this  I  do  not  wish  to  be  understood 
as  meaning  that  there  should  not  be  supervi- 
sion and  regulation  of  the  great  public-service 
corporations,  and  that  changing  conditions  do 
not  make  necessary  changes  in  method  and  In 
law.  But  I  do  say  that  care  should  be  taken 
not  to  have  that  supervision  and  regulation  go 
so  far  that  it  practically  takes  the  real  power  of 
management  away  from  those  who  have  in- 
vested their  money  In  the  business.  So  long  as 
199 


THE  TRUTH  ABOUT  THE  RAILROADS 

they  have  their  money  Invested,  so  long  as 
they  are  responsible  for  the  financial  results,  so 
long  as  they  give  adequate,  reasonable,  and 
safe  service  at  rates  that  will  permit  of  gross 
earnings  sufficient  to  pay  expenses,  taxes,  in- 
terest on  debts,  take  care  of  depreciation  and 
obsolescence,  and  pay  a  reasonable  return  to 
the  owners,  they  must  have  the  right  to  decide 
many  important  questions,  particularly  those 
relating  to  the  details  of  service,  the  organiza- 
tion of  the  staff,  and  the  rules  and  regulations 
under  which  the  staff  and  employees  must 
work  to  produce  the  greatest  efficiency  and 
safety. 

A  public  opinion  that  will  impress  officers 
and  men  with  the  fact  that  reasonable  rules 
and  regulations  in  the  interest  of  safeguarding 
human  life  and  of  efficient  operation  must  be 
made  and  obeyed,  and  that  swift  punishment 
will  be  meted  out  to  all,  whether  directors, 
officers,  or  employees,  whether  members  of 
labor  unions  or  not,  who  fail  to  respond  to  that 
public  opinion.  Is  of  vital  importance  to  the 
welfare  of  all.  Sentiment  of  this  kind  and  less 

200 


TRANSPORTATION  IN  NEW  ENGLAND 

insistent  demand  for  high  speed  will  do  more 
to  insure  safety  than  steel  cars  and  automatic 
signals. 

And  then,  after  twenty-three  years  of  ser- 
vice on  that  great  C.  B.  &  Q.,  and  a  close  asso- 
ciation with  Mr.  Perkins  during  a  large  part  of 
that  time,  I  was  equally  fortunate  in  working 
under  and  with  another  most  remarkable  man, 
who  has  made  a  lasting  impression,  not  only  on 
the  Northwest  but  on  the  whole  country,  — 
James  Jerome  Hill.  Mr.  Hill  has  a  peculiar 
faculty  of  being  able  to  look  into  the  future,  of 
gauging  the  growth  of  the  country,  and  of  fore- 
seeing how  business  will  develop.  He  was  the 
leader  in  promoting  an  idea  that  seems  very 
simple,  but  was  too  long  neglected  and  even 
now  is  neglected,  namely,  that  the  efficient  use 
of  the  railroad  and  the  elimination  of  waste  in 
operating  the  railroad  are  absolutely  necessary 
if,  in  a  country  as  large  as  the  United  States 
and  as  populous  and  prosperous  as  it  is  and 
will  be,  food,  clothing,  and  shelter  are  to  be 
provided  at  a  minimum  investment  of  capital 
and  at  a  minimum  charge  to  the  public. 

201 


THE  TRUTH  ABOUT  THE  RAILROADS 

Here  In  New  England,  as  much  as  In  any 
part  of  the  country,  the  teachings  and  Inspira- 
tions of  these  two  great  masters  of  the  art  of 
transportation  are  of  vital  Importance.  Here 
are  the  most  complicated  relations  between  the 
railroads  and  those  that  they  are  trying  to 
serve.  Here  Is  the  greatest  necessity  for  the 
elimination  of  all  waste  and  lost  motion.  Here, 
because  of  the  extreme  difficulty,  both  finan- 
cial and  physical,  of  Improving  and  adding  to 
the  capacity  of  that  machine,  the  most  effi- 
cient use  of  the  transportation  machine  Is 
absolutely  essential.  Any  man  who  has  been 
fortunate  enough  to  receive  the  benefit  of 
training  under  and  with  these  two  men  has  had 
an  experience  of  priceless  value  to  him  in 
doing  his  daily  work. 

During  the  last  five  years  I  have  tried 
throughout  the  West  to  present  the  railroad 
side  of  the  transportation  question.  Some 
have  criticised  me  and  said  my  motive  was 
purely  selfish  and  that  all  I  was  after  was 
increased  earnings  for  the  railroads.  These 
critics  did  not  look  quite  far  enough.  It  Is  true 

202 


TRANSPORTATION  IN  NEW  ENGLAND 

I  had  that  point  in  mind,  as  any  honest  trustee 
for  other  people's  property  should  have.  But  I 
also  had  in  mind  a  much  broader  considera- 
tion, namely,  that  the  country  can  not  attain 
its  best  growth  unless  the  people  can  be  made 
to  see  that  adequate  and  safe  transportation 
is  absolutely  necessary,  and  that  it  cannot  be 
obtained  through  private  ownership  unless, 
under  honest  management,  enough  money  is 
earned  to  pay  approximately  the  same  return 
to  the  investor  as  is  received  by  investors  in 
other  classes  of  business  in  the  same  territory, 
and  in  addition  lay  up  a  fund  to  provide  for 
bad  times,  when  earnings  are  poor.  If  we  are 
to  continue  to  have  privately  owned  railroads 
supervised  and  regulated  by  governmental 
authority,  and  if  we  are  to  avoid  ownership  by 
the  Government,  the  owners  and  users  of  the 
railroads  must  all  work  together.  Personally, 
I  do  not  believe  in  governmental  ownership  in 
a  country  like  the  United  States,  where  our 
political  methods  are  still  in  need  of  improve- 
ment. 

The  policy  of  the  Government,  national  and 
203 


THE  TRUTH  ABOUT  THE  RAILROADS 

state,  during  the  last  twenty-five  years  seems 
to  have  been  to  decide  rate  questions  in  the 
great  majority  of  cases  in  such  a  way  that  rates 
were  rarely  advanced  and  generally  were  re- 
duced, and  to  introduce  rules,  regulations,  and 
methods  that  increased  expenses.  I  am  not 
contending  at  this  time  that  this  policy  was 
and  is  wrong,  or  that  control  and  restraint  by 
governmental  authorities  should  cease,  al- 
though something  could  be  said  about  that 
great  question.  I  do,  however,  want  to  make 
a  plea  that  coupled  with  restraint  and  control 
there  should  be  protection  to  the  owners  of  the 
securities.  The  commissions,  both  state  and 
national,  naturally  feel  the  great  pressure  of 
the  millions  of  users  of  the  railroads  for 
reduced  rates  and  increased  facilities.  But  if 
the  rates  continue  to  decline,  or  even  remain 
on  the  present  level,  and  if  expenses  are  in- 
creased by  higher  wages  and  cost  of  materials, 
and  by  the  introduction  of  different  appliances 
and  facilities  more  rapidly  than  the  roads  can 
obtain  money,  then  there  is  but  one  result  for 
some  of  the  railroads  of  the  United  States,  and 
204 


.  TRANSPORTATION  IN  NEW  ENGLAND 

that  Is  bankruptcy.  This  will  naturally  be 
preceded  by  a  desperate  effort  on  the  part  of 
the  management  to  postpone  that  evil  day  as 
long  as  possible  by  stopping  every  improve- 
ment and  betterment  that  can  be  stopped.  I 
believe  the  commissioners  who  have  such 
great  powers  realize  their  responsibility  to  the 
owners  of  the  properties  as  well  as  to  the  users, 
and  I  hope  earnestly  that  they  will  give  practi- 
cal evidence  of  their  realization  by  permitting 
some  advances  In  rates. 

Should  the  commissions,  federal  and  state, 
make  a  positive  declaration  that  rates  may  be 
advanced  so  as  to  permit  the  properties  to 
meet  all  of  their  obligations,  pay  a  fair  return 
to  stockholders,  and  leave  a  balance  for  im- 
provements, they  will  do  much  for  the  entire 
country  and  particularly  for  New  England. 
Such  a  declaration  will  at  once  inspire  confi- 
dence and  give  to  existing  securities  a  better 
standing  than  they  now  have,  both  here  and  in 
Europe,  and  will  help  to  market  new  securities 
upon  an  interest  basis  more  favorable  than  Is 
now  possible,  with  the  uneasiness  In  the 
20:; 


THE  TRUTH  ABOUT  THE  RAILROADS 

minds    of   investors    about    the    future   net 
earnings  of  the  railroads. 

Let  us  look  for  a  minute  at  a  few  facts  about 
the  great  transportation  machine  made  up  of 
the  New  Haven  and  New  England  lines  and 
associated  properties.  There  are  7976  miles  of 
railroad  and  14,175  miles  of  track.  Of  the 
track  29  per  cent  is  in  Massachusetts,  20  per 
cent  in  Connecticut,  14  per  cent  in  Maine, 
13  per  cent  in  New  York,  12  per  cent  in  New 
Hampshire,  6  per  cent  in  Rhode  Island,  4  per 
cent  in  Vermont,  and  2  per  cent  elsewhere. 
(See  Table  A,  page  227.)  There  are  3 197  loco- 
motives, 8088  passenger-train  cars,  79,522 
freight-train  cars,  and  3541  work-cars.  These 
units  of  rolling  stock,  which  aggregate  more 
than  94,000,  if  coupled  together,  would  occupy 
about  750  miles  of  track,  or  make  an  unbroken 
train  which  would  stretch  from  Vanceboro,  on 
the  Canadian  border  in  Maine,  through  Port- 
land, Boston,  and  New  York  to  and  beyond 
Philadelphia.  Then  there  is  the  marine  equip- 
ment of  240  steamers,  tugs,  barges,  etc.  But 
this  rolling  stock  is  not  standing  still.  Each 
206 


TRANSPORTATION  IN  NEW  ENGLAND 

year  the  locomotives  run  about  80,000,000 
miles,  the  passenger-train  cars  move  220,000,- 
000  miles,  and  the  freight-cars  move  624,000,- 
000  miles.  The  total  mileage  of  these  units  of 
equipment  is  2,500,000  miles  per  day,  or  more 
than  100,000  miles  every  hour. 

These  impressive  figures  are  even  more  im- 
pressive when  used  as  an  index  of  service  in 
carrying  passengers  and  freight.  Each  year 
the  New  England  lines  and  associated  proper- 
ties, including  the  steamboats  and  electric 
lines,  carry  252,000,000  passengers,  a  number 
which  is  more  than  double  the  entire  popula- 
tion of  North  America.  Expressed  in  other 
terms,  the  New  England  lines  hourly  trans- 
port 30,000  people. 

The  figures  for  the  volume  of  freight  busi- 
ness indicate  an  immensity  of  transactions 
which  few  appreciate.  Every  year  78,000,000 
tons  of  freight  are  carried,  9000  tons  every 
hour.  The'complexity  of  the  problem,  however, 
is  not  indicated  by  the  tonnage  alone.  In  con- 
nection with  its  movement  13,600,000  way- 
bills are  issued.  Each  waybill,  however,  usu- 
207 


.THE  TRUTH  ABOUT  THE  RAILROADS 

ally  covers  several  Items,  and  it  is  estimated 
that  the  number  of  freight  transactions  in  a 
year  is  44,000,000, — 141,000  for  each  work- 
ing day,  or  nearly  5875  for  every  hour  of 
the  day.  Is  it  to  be  wondered  at  that  some 
shipments  go  astray  or  that  some  freight  is 
damaged? 

The  unusual  character  of  the  railroad  busi- 
ness of  New  England  Is  apparent  when  the 
returns  for  the  New  Haven  road  are  compared 
with  those  for  the  entire  United  States.  Con- 
sidering all  the  railroads  of  the  country  as  one 
system,  two  tons  of  freight  are  transported  for 
every  passenger.  On  the  New  Haven  road 
alone,  the  ratio  of  freight  to  passenger  business 
is  reversed.  That  road  transports  only  one 
third  of  a  ton  to  one  passenger.  The  passenger 
density  of  the  New  Haven  road  is  more  than 
six  times  as  great  as  that  on  all  the  railroads 
of  the  country  considered  as  a  system.  These 
figures  show  the  marked  preponderance  of 
passenger  business  In  New  England.  Through 
the  Boston  South  Station  alone  105,000  people 
pass  daily.  The  passengers  passing  through 
208 


TRANSPORTATION    IN    NEW    ENGLAND 

that  one  station  each  week  equal  the  total 
population  of  Boston. 

To  have  this  great  transportation  machine 
work  smoothly,  with  the  fewest  points  of 
obstruction  and  interruption  —  the  least 
amount  of  friction  —  and  with  the  greatest 
harmony  among  all  its  constituent  parts, 
means,  in  the  long  run,  the  furnishing  of  the 
best  transportation  service  to  the  people  of 
New  England. 

The  operating  revenues  of  all  of  the  proper- 
ties for  the  last  fiscal  year  were  in  round  num- 
bers ^155,000,000,  The  operating  expenses 
were  ^112,000,000.  Of  operating  expenses 
approximately  ^66,000,000,  or  59  per  cent,  was 
paid  in  wages,  —  an  average  payment  to  each 
employee  of  about  ^700  a  year.  The  remain- 
ing 41  per  cent,  or  ^46,000,000,  was  paid  for 
fuel,  supplies,  etc.,  but  a  large  part  of  it  goes 
indirectly  to  labor  engaged  in  the  production 
of  the  materials  purchased.  This  large  payroll 
is  an  important  factor  to  the  communities 
served  by  the  properties,  as  much  of  the  money 
finds  its  way  each  month  to  merchants  and 
209 


THE  TRUTH  ABOUT  THE  RAILROADS 

others.  The  total  taxes  paid  by  these  proper- 
ties was  ^7,640,000,  a  very  substantial  contri- 
bution to  the  funds  for  carrying  on  the  gov- 
ernment. 

But  the  people  of  New  England  have  other 
interests  in  their  railroads.  Not  only  is  the 
railroad  service  a  vital  part  of  the  social  organ- 
ization, but  its  earning  power  as  well  affects  a 
large  and  widely  distributed  number  of  invest- 
ors. The  number  of  security-holders  of  the 
New  Haven  and  New  England  lines  and 
associated  properties  is  estimated  at  60,000. 
The  great  majority  of  them  live  in  New  Eng- 
land. Of  the  stock  in  the  New  Haven  road, 
36  per  cent  is  held  in  Massachusetts,  and  the 
stockholders  in  Massachusetts  constitute  48  per 
cent  of  the  total.  Connecticut  holds  19  per 
cent  of  the  shares.  New  York  32  per  cent,  and 
Rhode  Island  3  per  cent.  Of  the  remaining  10 
per  cent,  many  shares  are  held  by  residents  of 
New  Hampshire,  Vermont,  and  Maine.  Of 
Boston  &  Maine  stock,  88  per  cent  is  held  in 
Massachusetts  by  66  per  cent  of  the  stock- 
holders, and  only  3  per  cent  of  the  shares  are 
210 


TRANSPORTATION  IN  NEW  ENGLAND 

held  outside  of  Massachusetts,  New  Hamp- 
shire, and  Maine.  (See  Table  B,  page  228.) 

It  is  commonly  believed  that  railroad  stocks 
are  concentrated  in  the  hands  of  a  few.  That 
this  is  not  true  of  the  New  Haven  and  Boston 
&  Maine  will  be  apparent  when  it  is  known  that 
43  per  cent  of  the  New  Haven  stockholders 
own  only  from  one  to  ten  shares  each,  and  38 
per  cent  own  from  11  to  50  shares  each.  With 
Boston  &  Maine  stock  the  proportion  of 
investors  holding  a  small  number  of  shares  is 
even  more  striking.  Those  who  have  from  one 
to  ten  shares  comprise  60  per  cent  of  the  total 
shareholders;  those  holding  from  11  to  50 
shares  make  up  3 1  per  cent;  leaving  only  9  per 
cent  with  holdings  which  exceed  50  shares 
each.  Of  the  New  Haven  stock,  44  per  cent  is 
held  by  women  and  15  per  cent  by  trustees  and 
guardians.  Of  Boston  &  Maine  stock,  49  per 
cent  is  held  by  women  and  14  per  cent  by 
trustees  and  guardians.  (See  Table  B,  page 
228.) 

To  maintain  and  operate  this  great  trans- 
portation machine  requires  the  services  of  from 
211 


THE  TRUTH  ABOUT  THE  RAILROADS 

90,000  to  100,000  men  (92,792  on  last  pay- 
roll). These  employees  and  these  investors  are 
drawn  from  all  walks  of  life.  They  are  human 
beings  with  hopes  and  aspirations  and  joys  and 
sorrows.  The  livelihood  of  employees  neces- 
sarily depends  upon  the  return  from  their 
labor,  and  this  in  turn  depends  upon  the  pros- 
perity of  New  England  and  the  railroads  of 
New  England.  In  a  smaller  degree  the  com- 
fort and  well-being  of  many  investors  depend 
upon  the  return  from  their  investment,  and 
this  also  depends  upon  the  prosperity  of  New 
England  and  of  her  railroads.  These  investors 
and  these  employees,  with  their  families,  on  a 
basis  of  four  to  one,  make  640,000  people,  or 
nearly  one  tenth  of  the  population  of  New 
England.  Should  not  their  rights,  comforts, 
and  feelings  be  considered  carefully  in  the  cur- 
rent tempestuous  discussion  in  regard  to  the 
New  England  railroads  ^ 

The  stockholders  of  the  three  important 

New  England  railroads  —  the  New  Haven, 

the  Boston  &  Maine,  and  the  Maine  Central 

— have  selected  forty-eight  men  to  act  as  their 

212 


TRANSPORTATION  IN  NEW  ENGLAND 

directors,  (See  Table  C,  page  230.)  Of  these, 
three  sit  on  all  three  boards  and  eight  sit  on 
two  boards.  Of  the  forty-eight  directors, 
forty-two  live  in  New  England,  four  in  New 
York,  and  two  in  Philadelphia.  Those  who  are 
also  directors  of  the  so-called  trunk  lines  out- 
side of  New  England  are  five  in  number. 

These  directors  are  interested  in  the  welfare 
of  the  roads  they  represent,  and  of  the  country 
that  those  roads  are  trying  to  serve.  They 
exercise  the  final  powers  of  management,  and 
can  approve  or  disapprove  the  action  of  the 
officers,  and  can  direct  them.  They  cannot 
know  all  details,  and  they  must  rely  largely  on 
the  reports  and  recommendations  of  the 
officers  on  whom  rests  the  first  responsibility 
of  careful  investigation  of  the  problems  of 
management.  They  demand  that  the  officers 
give  their  undivided  time  and  attention  to  the 
railroad  business,  and  to  working  harmoniously 
with  the  patrons  of  the  roads,  the  employees, 
and  the  public  authorities. 

It  is  difficult  to  obtain  the  material  things 
needed  for  the  upbuilding  of  a  railroad,  but  it 
213 


THE  TRUTH  ABOUT  THE  RAILROADS 

is  even  more  difficult  to  get  men.  No  more 
important  work  faces  the  management  than  to 
create  a  staff  of  officers  that  can  carry  on  this 
great  work  and  have  it  so  organized  that  when 
for  any  reason  one  man  retires  there  is  another 
to  take  his  place.  Equally  important  is  the 
work  of  encouraging  the  great  army  of  em- 
ployees, of  inspiring  them  with  a  feeling  of 
loyalty  to  New  England  and  to  the  railroad, 
and  of  making  safe  the  conditions  under  which 
they  work.  Every  effort  will  be  made  to  build 
up  a  complete  staff  of  officers  and  men  from 
those  now  in  the  service  and  in  New  England, 
men  who  know  the  local  conditions,  and  who 
will  respond  loyally  to  suggestions  for  the 
closest,  most  efficient,  and  most  economical 
operation.  These  two  pieces  of  work  are  even 
more  important  to  the  traveling  and  shipping 
public  than  to  the  owners,  because  the  daily 
work  of  the  railroad  must  be  done,  or  people 
will  starve  or  freeze,  and  business  stop.  This 
daily  work  cannot  be  done  right  if  officers  and 
men  are  harassed  and  worried. 

All  of  us  are  animated  with  a  high  purpose 
214 


TRANSPORTATION  IN  NEW  ENGLAND 

to  do  our  full  duty,  and  we  have  no  desire 
for  self-aggrandizement  and  self-glorification. 
Our  reward  will  come,  if,  in  time,  this  compli- 
cated machine  can  be  adjusted  so  that  it  will 
run  smoothly,  without  friction,  pay  a  fair 
return  to  the  owners,  and  become  so  much  a 
part  of  the  daily  life  of  the  public  that  no  more 
attention  is  paid  to  it  than  is  paid  now  to 
drawing  water  from  a  faucet  or  turning  on  an 
electric  light. 

Shall  we  not  advance  the  Interests  of  New 
England,  and  the  peace,  prosperity,  and  con- 
tentment of  her  people  if  we  are  careful  to  be 
temperate  and  accurate  in  our  statements  and 
criticisms  of  others,  and  if  we  try  to  follow  the 
principle  the  patient  Lincoln  laid  down  when 
he  said :  "  I  do  the  best  I  know  —  the  very  best 
I  can;  and  I  mean  to  keep  right  on  doing  so 
until  the  end.  If  the  end  brings  me  out  all 
right,  what  is  said  against  me  won't  amount  to 
anything;  if  the  end  brings  me  out  wrong,  ten 
angels  swearing  I  was  right  would  make  no 
difference." 

I  have  faith  in  the  future  of  New  England 
215 


THE  TRUTH  ABOUT  THE  RAILROADS 

and  in  the  good  sense  and  judgment  of  her 
people  in  arriving  at  the  right  conclusions 
when  they  understand  and  appreciate  the  real 
facts.  I  have  hope  that  a  better  understanding 
of  the  railroad  side  of  the  problem  will  be 
brought  home  to  the  people,  so  that  they  can 
see  the  difficulties  which  directors,  officers, 
and  employees  in  the  railroad  service  are  try- 
ing to  overcome,  and  that  the  people  will  real- 
ize the  sincere  spirit  which  animates  these 
men  to  do  the  best  they  can  with  a  difficult 
situation. 

Man-fashion,  we  must  take  the  situation  as 
it  is  and  carry  the  burden  as  well  as  we  can. 
We  must  be  thankful  for  the  good  things  of 
the  past,  and  try  so  to  improve  the  situation 
that  those  who  come  after  us  will  be  thankful 
for  some  good  work  and  not  too  uncharitable 
about  the  mistakes  that  will  undoubtedly  be 
made.  We  will  try,  however,  not  to  make  the 
same  mistakes  twice.  It  does  not  seem  as  if 
any  positive  beneficial  results  could  be  ob- 
tained by  a  lack  of  confidence  and  by  continu- 
ous wrangling.  If  the  people  of  New  England 
216 


TRANSPORTATION  IN  NEW  ENGLAND 

cannot  trust  their  railroad  management,  and 
if  the  railroad  management  cannot  trust  the 
people  of  New  England,  a  situation  is  created 
that  is  unfortunate  now  and  more  unfortunate 
for  the  future  and  for  our  children  and  grand- 
children, because  so  much  needs  to  be  done  in 
the  developing  and  upbuilding  of  the  New 
England  States.  I  believe  we  can  all  trust  one 
another,  and  I,  for  my  part,  will  do  all  that  I 
can,  and  see  that  the  officers  and  employees  of 
the  various  railroads  do  all  they  can  to  bring 
about  that  condition.  Intelligent  and  whole- 
some criticism  is  asked  for  and  expected,  and 
such  criticism  is  a  spur  to  the  management  to 
be  faithful  to  their  trust  and  careful  in  their 
work. 

There  will  always  be  differences  of  opinion 
between  buyers  and  users  of  transportation 
on  the  one  hand  and  manufacturers  and  sellers 
of  transportation  on  the  other  hand,  because 
buyers  and  sellers,  in  the  nature  of  things,  will 
not  always  agree  about  the  price  and  the  qual- 
ity of  the  article  or  service  furnished.  In  such 
cases  I  hope  wc  can  discuss  the  differences 
217 


THE  TRUTH  ABOUT  THE  RAILROADS 

calmly,  without  prejudice,  without  any  dis- 
turbance to  the  transportation  machine  which 
is  so  dehcately  adjusted,  and  without  any  de- 
moralization among  officers  and  employees, 
because  any  disturbance  of  this  transportation 
machine  reacts  in  many  directions.  I  hope 
that  if  we  should  be  unable  to  agree  among 
ourselves,  we  can  arbitrate  the  matter  in  an 
orderly  way  before  those  tribunals  and  courts 
which  have  been  created  for  such  purposes. 

Important  complaints  about  the  railroad 
generally  arise  from  :  (i)  A  desire  of  one  per- 
son or  community  to  have  better  rates  or  bet- 
ter relation  of  rates  than  some  other  person  or 
community.  These  complaints  are  very  diffi- 
cult to  handle,  because  the  railroad  must  con- 
sider all  persons  and  all  communities,  and  is 
sometimes  blamed  unjustly  for  not  doing 
something  that  one  person  or  one  community 
wants,  when  If  it  did  so  act  It  would  do  an 
injustice  and  invite  other  and  more  serious 
complaints  from  other  persons  or  other  com- 
munities. (2)  A  desire  of  persons  or  communi- 
ties for  Improved  physical  facilities,  better 
218 


TRANSPORTATION   IN   NEW  ENGLAND 

cars,  better  stations,  more  and  better  trains, 
grade-separations,  etc.  These  complaints  can 
be  adjusted  only  by  expenditures  of  very  large 
sums  of  money,  which,  of  course,  can  be  ob- 
tained only  by  earning  it  or  by  borrowing  it. 
Borrowing  cannot  continue  indefinitely  unless 
the  rates  received  for  service  are  sufficient  to 
pay  all  proper  expenses,  —  taxes,  interest,  and 
a  sufficient  margin  to  permit  some  improve- 
ments to  be  made  each  year  out  of  earnings 
and  some  return  to  the  owners  of  the  securities. 
It  is,  therefore,  to  the  interest  of  every  one  to 
realize  that  while  he,  or  the  community  in 
which  he  lives,  would  like  to  have  his  or  its 
particular  rate  reduced,  or  its  particular  facil- 
ity improved,  nevertheless,  in  the  interest  of 
New  England  as  a  whole,  the  general  rate- 
situation  should  permit  earnings  sufficient  to 
meet  the  payments  above  described. 

It  is  no  disparagement  of  Theodore  Roose- 
velt to  say  that  for  a  part  of  his  official  life  he 
seemed  to  be  opposed  to  railroads  and  railroad 
methods  as  he  understood  them,  and  yet  in 
one  of  his  messages  to  Congress  he  used  these 
219 


THE  TRUTH  ABOUT  THE  RAILROADS 

words:  "It  must  not  be  forgotten  that  your 
railways  are  the  arteries  through  which  the 
commercial  life  blood  of  the  nation  flows. 
Nothing  could  be  more  foolish  than  the  enact- 
ment of  legislation  which  would  unnecessarily 
interfere  with  the  development  and  operation 
of  these  commercial  agencies." 

Recently,  as  a  keen  observer  and  student  of 
public  opinion,  he  seems  to  realize,  as  do  many 
others,  that  there  is  danger  that  the  people 
have  gone  too  far  in  reducing  the  power  of  the 
railroads  to  make  net  earnings.  He  wrote  a 
forceful  article  published  in  the  "Outlook"  of 
July  5,  191 3,  entitled  "  The  Living  Wage  and 
the  Living  Rate."  Two  paragraphs  in  that 
article  are  pertinent  to  the  New  England  rail- 
road situation.  The  first  is :  — 

"But  it  must  be  a  cardinal  principle  in  deal- 
ing with  honestly  built  and  wisely  managed 
railways  that  the  investor,  the  shareholder,  is 
just  as  much  entitled  to  protection  as  is  the 
wage-worker,  the  shipper,  or  the  representa- 
tives of  the  general  public.  Unless  the  investor 
finds  that  he  is  to  get  a  fair  return  on  his 
220 


TRANSPORTATION  IN  NEW  ENGLAND 

money,  he  will  not  invest,  and  in  such  case  not 
only  will  no  new  railways  be  built  but  existing 
railways  will  not  be  able  to  repair  the  waste, 
the  wear  and  tear,  to  which  they  are  subject, 
and  will  not  be  able  to  make  needed  improve- 
ments. All  governmental  action,  whether  by 
legislature  or  the  executive,  should  be  condi- 
tioned upon  keeping  in  view  this  fact." 

And  again,  referring  to  the  advance  in  rates 
requested  by  some  of  the  Eastern  lines,  he 
says :  "  In  the  concrete  case  before  us  it  is  for 
the  Commission  to  determine  with  strict  jus- 
tice to  all  parties  how  the  relative  and  often 
conflicting  demands  of  the  shareholders,  the 
wage-workers,  the  shippers,  and  the  general 
public  can  properly  be  met.  I  am  not  dis- 
cussing —  I  have  not  the  knowledge  which 
would  warrant  my  discussing  —  whether  the 
rates  should  be  raised.  If  the  facts  do  not 
warrant  a  raise,  then  the  raise  should  not  be 
permitted;  but  if  justice  and  the  interest  of  our 
people  as  a  whole  demand  a  raise  in  rates,  then 
that  raise  in  rates  should  unhesitatingly  be 
authorized." 

221 


THE  TRUTH  ABOUT  THE  RAILROADS 

In  managing  a  railroad,  just  as  in  any  other 
business,  different  kinds  of  talent  and  ability 
must  be  employed  to  safeguard  the  business, 
—  engineering  talent,  operating  talent,  com- 
mercial talent,  and  financial  talent.  In  a  very 
large  business  the  best  talent  should  be  em- 
ployed and  the  going  prices  for  such  talent 
must  be  paid.  The  management  of  the  New 
England  lines  wants  to  use  the  best  financial 
talent  it  can  find  to  help  it  in  raising  the  money 
needed.  It  wishes  to  employ  those  bankers,  no 
matter  where  they  live,  who  can  do  the  work. 
It  would  prefer  to  employ  bankers  in  New 
York  and  Boston,  who  naturally  want  to  help 
the  development  of  the  country  and  of  the 
roads.  The  management  of  the  properties  will 
be  more  than  pleased  if  New  England  bankers, 
banks,  and  investors  will  furnish  their  full 
share  of  the  money  needed  now  and  in  the 
future,  and  will  assist  in  obtaining  that 
money  in  the  markets  of  the  world. 

If  a  business  is  stagnant  and  dying  of  dry 
rot,  no  new  money  will  be  needed  and  there 
will  be  no  need  of  the  help  of  the  experienced 

222 


TRANSPORTATION  IN  NEW  ENGLAND 

banker  or  financial  agent;  but  if  the  business  is 
to  grow,  especially  if  it  is  a  public-service  busi- 
ness, which  must  respond  to  the  demands  of 
the  public  for  good  service,  new  money  over 
and  above  what  can  be  obtained  from  earnings 
is  needed  at  frequent  intervals  and  in  very 
large  amounts.  The  greater  the  amounts 
needed,  the  greater  the  need  of  expert  advice 
and  financial  aid  of  the  very  best  quality, 
because  by  training  and  experience  bankers 
know  where  and  how  money  can  be  obtained. 
With  proper  aid  from  bankers  the  officers  of 
the  company  will  not  have  their  attention  too 
much  diverted  from  the  work  of  careful  man- 
agement, safe  and  efficient  operation,  and 
good  service  to  the  public.  The  United  States 
Government,  state  governments,  and  munici- 
palities all  turn  at  times  to  the  banker  for  his 
aid  in  placing  their  securities  in  the  hands  of 
small  investors  all  over  the  country. 

The  complete  development  of  New  Eng- 
land's varied  resources  has  not  been  accom- 
plished. The  day  is  not  far  distant  when  to  a 
greater  extent  than  ever  before  the  unused 
223 


THE  TRUTH  ABOUT  THE  RAILROADS 

water-power  will  supply  the  energy  to  turn  the 
wheels  of  factories  now  here  and  those  which 
will  come  with  cheaper  power  and  adequate 
transportation.  New  England's  farms  must  be 
repeopled,  and  a  change  is  going  on  even  now. 
Progressive  farmers  and  immigrants  from 
Europe  are  teaching  a  lesson  which  should  be 
heeded,  —  namely,  that  agriculture  and  horti- 
culture in  New  England  can  be  revived  and 
pursued  with  profit.  In  addition  to  this,  more 
animals  fit  for  food  should  be  produced.  Mod- 
ern scientific  methods,  together  with  hard 
work,  patience,  and  intelligence,  should  pro- 
duce a  greater  proportion  of  the  food  which 
New  England  annually  consumes.  More  and 
more  is  this  region  becoming  the  summer  play- 
ground for  North  America.  The  more  factories 
and  industries,  the  greater  agricultural  devel- 
opment, the  larger  influx  of  visitors,  all  will 
mean  more  prosperity  for  New  England,  and 
for  her  railroads. 

Boston  and  New  England  have  a  just  pride 
in  the  harbor  facilities  here,  and  every  reason- 
able step  should  be  taken  to  build  up  this  port 
224 


TRANSPORTATION  IN  NEW  ENGLAND 

and  to  help  the  movement  of  business  via  this 
port.  The  growth  of  the  country  back  of  the 
port  is  the  best  guaranty  for  the  success  of 
the  port.  With  the  completion  of  the  Panama 
Canal  there  will  be  a  physical  opportunity  for 
vessels  to  clear  from  Boston  direct  to  the  Ori- 
ent and  to  the  Pacific  Coast.  Should  capital  be 
found  that  is  willing  to  invest  in  steamer  lines 
sailing  between  this  port  and  other  parts  of  the 
country  and  of  the  world,  there  will  be  no 
effort  made  by  this  management  to  discourage 
such  investment.  On  the  contrary,  any  move- 
ment that  will  help  to  market  the  products  of 
New  England,  that  will  place  them  in  greater 
quantities  in  the  hands  of  the  ultimate  con- 
sumer, will  receive  support. 

As  a  boy  in  Cambridge,  it  was  my  good  for- 
tune, with  three  other  smaller  boys,  to  spend 
one  afternoon  a  week  with  the  Rev.  Samuel 
Longfellow.  He  read  to  us,  told  us  stories,  and 
now  and  then  took  us  to  see  his  brother,  whose 
writings  are  so  full  of  humanity  and  good 
sense.  The  epigram  Longfellow  emphasizes  in 
"Hyperion"  is  applicable  to  the  present 
225 


THE  TRUTH  ABOUT  THE  RAILROADS 

industrial  and  railroad  situation  in  New  Eng- 
land:— 

"Look  not  mournfully  into  the  Past.  It 
comes  not  back  again.  Wisely  improve  the 
Present.  It  is  thine.  Go  forth  to  meet  the 
shadowy  Future  without  fear,  and  with  a 
manly  heart." 

New  England  has  had  a  glorious  past  and 
has  had  a  wonderful  influence  in  the  develop- 
ment of  the  whole  United  States.  She  has 
great  influence  and  power  to-day.  Her  loyal, 
public-spirited  sons  have  always  taken  their 
full  share  of  the  work  in  solving  the  problems 
of  the  country.  Her  own  industrial  and  trans- 
portation problems  will  be  solved,  and  all 
obstacles  will  be  overcome,  if  all  will  work  loy- 
ally together  for  a  greater  New  England,  if  all 
will  exercise  some  of  the  self-denial  and  patriot- 
ism that  Robert  Gould  Shaw  displayed  when 
he  marched  away  to  his  death  at  the  head  of 
his  troops,  to  serve  his  country  first  and  his 
family  and  himself  second.  Let  us  all  work  for 
the  best  development  of  all  New  England 
first,  and  not  be  swayed  too  much  by  the  local 
226 


TRANSPORTATION  IN  NEW  ENGLAND  . 

or  selfish  interest  of  one  community.  The 
highest  development  and  conservation  of  the 
resources  of  New  England  —  country,  town, 
and  city,  especially  the  country  —  will,  in  the 
long  run,  mean  the  best  development  for  the 
particular  community  in  which  any  individual 
maybe  interested. 


TABLE  A 

DISTRIBUTION  OF  ROAD  AND  TRACK  MILEAGE 

New  York,  New  Haven  &  Hartford,  Boston 

&  Maine,  Maine  Central,  and  Allied 

Properties 

September,   1913 


States 


Maine 

New  Hampshire 

Vermont 

Massachusetts.. 
Rhode  Island... 
Connecticut. . . . 

New  York 

Pennsylvania.. . 

New  Jersey 

Quebec 

New  Brunswick. 

Total 


Road  mileage 


Miles 


1,346.73 

1,174.22 

403.29 

1,882.82 

491.67 

1,549.96 

925.04 

53.66 

53-07 

90.59 

5.10 

7,976.15 
227 


Per  cent 


16.8 
14.7 

S-I 

23.6 

6.2 

19.4 

II.6 

•7 

•7 

I.I 

.1 

lOO.O 


Track  mileage 


Miles 


1,923.75 

1,6974s 

537-98 

4,144.90 

838.98 

2,808.89 

1,863.41 

139-56 

106.14 

109.42 

5.10 

14,175-58 


Per  cent 


13.6 
12.0 

3.8 
29-3 

5-9 
19.8 

I3-I 
i.o 

.7 


1 00.0 


THE  TRUTH  ABOUT  THE  RAILROADS 
TABLE  B 

CLASSIFICATION    OF    OUTSTANDING    CAPITAL 
STOCK 

New  York,  New  Haven  &  Hartford  Railroad 
Company  as  of  July  i,  1913 


No.  of  shares 

Per  cent 

No.  of 
shareholders 

Per  cent 

Massachusetts 

Connecticut 

New  York 

571,009 
306,766 
495,602 
47,606 
150,196 

36.29 

19-54 

31-56 

3-05 

9-56 

11,481 

5,682 
3,510 

735 

2,560 

47.90 
23-70 
14.65 

Rhode  Island 

3 -07 

Elsewhere 

10.68 

Total 

1,571,179 

100.00 

23,968 

100.00 

Boston  &  Maine  Railroad  Company  as  of 
July  i,  1912 


No.  of  shares 

Per  cent 

No.  of 
shareholders 

Per  cent 

Massachusetts 

New  Hampshire 

Maine 

375,691 
17,543 
19,158 
14,156 

88.1 
4.1 
4-5 
3-3 

5,372 

1,446 

622 

682 

66.2 

17.8 

7.6 

Elsewhere 

8.4 

Total 

426,548 

lOO.O 

8,122 

lOO.O 

228 


TRANSPORTATION  IN  NEW  ENGLAND 

TABLE  B   {continued) 
•  Distribution  of  Shares 


Number  of  shares 

N.Y.,N.H. 
&H. 

Per  cent 

B.  &M. 

Per  cent 

I  to  10  shares,  inclusive 

II  to  so                  do 
SI  to  lOO                do 
loi  to  500               do 
SOI  to  1,000           do 
1,001  and  over       do 

10,222 

8,987 

2,383 

2,0X2 

217 

147 

42.6 

37.6 

9.9 

8.4 

•9 

.6 

4,89s 

2,531 

403 

264 

IS 
14 

60.2 
31.2 

S-o 

.2 

23,968 

100 .0 

8,122 

1 00.0 

Distribution  of  Shareholders 


Stockholders 

N.Y.,N.H.  & 
H.  R.  R.  Co. 

Boston  &  Maine 

Number 

Per  cent 

Number 

Per  cent 

Males 

9,008 

10,474 
3,702 

784 

37-9 
43-S 
iS-4 

3-2 

2,742 

3,941 
1,116 

323 

33-8 
48.6 
13.6 

4.0 

Females 

Trusts  and  guardianships . . . 

Insurance    companies    and 

other  corporations 

Total 

23,968 

1 00.0 

8,122 

lOO.O 

229 


THE  TRUTH  ABOUT  THE  RAILROADS 
TABLE   C 

DIRECTORS    OF    THE   NEW   YORK,   NEW    HAVEN 

&  HARTFORD,   BOSTON  &  MAINE,  AND 

MAINE    CENTRAL   RAILROADS 

September  30,  1913 


Residents  of 

New 
England 

New  York 

Philadelphia 

Totel 

New  York,  New  Ha- 
ven    &     Hartford 
Railroad 

Boston       &      Maine 
Railroad 

21 

18 
16 

5S 

4 
4 

2 

I 
3 

27 
18 

Maine    Central  Rail- 
road  

17 

Total 

67 

Number  of  Directors  serving  on  boards  of  the  three 
Companies 3 

Number  of  Directors  serving  on  boards  of  two  of  the 
three  Companies 8 

Number  of  Directors  serving  on  board  of  one  of  the 
three  Companies 37 

Total  number  of  Directors 48 

RESIDENTIAL  DISTRIBUTION  OF  DIRECTORS 

Massachusetts 12 

Connecticut. . . .  s 15 

Maine 9 

New  Hampshire S 

Rhode  Island I 

New  York 4 

Pennsylvania 2 


Total. 


48 


VIII 

PUBLIC  OPINION:  ITS  EFFECT  ON  BUSINESS » 

In  the  preface  to  his  friendly  volume  "The 
United  States  in  the  Twentieth  Century,"  M. 
Pierre  Leroy-Beaulieu,  one  of  the  keenest  of 
foreign  observers  of  conditions  in  the  United 
States,  and  a  noted  economist,  uses  this  strik- 
ing language:  — 

"Moral  worth,  which  includes  the  recogni- 
tion of  duties  as  well  as  of  rights,  self-respect, 
and  respect  for  one's  fellows,  has  contributed, 
fully  as  much  as  the  magnificent  resources  of 
their  country,  to  the  brilliant  success  of  the 
American  people.  Of  the  qualities  that  have 
cooperated  to  elevate  them  so  rapidly  to  such 
a  commanding  position,  the  most  impressive 
is  a  great,  a  tireless  energy.  Now  that  the 
obstacles  raised  by  nature  have  been  overcome, 
now  that  the  country  is  already  so  wealthy 

*  Address  delivered  before  the  Publicity  Club  of  Minne- 
apolis, January   lo,  1912. 

231 


THE  TRUTH  ABOUT  THE  RAILROADS 

that  the  individual  cannot  always  hope  to  see 
his  efforts  as  richly  compensated  as  was  form- 
erly the  case,  there  is  danger  that  this  precious 
quality  may  be  to  some  degree  lost.  It  seems 
to  me  that  the  first  care  of  the  Americans 
should  be  to  maintain  it  in  all  its  integrity. 
The  essential  condition  to  the  development  of 
energy  is  liberty.  Every  restriction  on  liberty, 
with  however  good  purpose,  diminishes  the 
individual  responsibility  and  initiative.  Yet  we 
often  hear  mooted  in  America,  as  elsewhere, 
measures  which,  under  the  pretext  of  correct- 
ing abuses,  would  immeasurably  extend  the 
state's  field  of  action,  and  reduce  the  liberty  of 
citizens.  It  is  my  earnest  hope  that  the  Ameri- 
can democracy  will  reject  such  enervating 
proposals,  and  will  remain  true  to  the  virile 
and  liberal  traditions  that  have  insured  the 
United  States  so  wonderful  a  growth." 

In  this  short  space  a  foreign  observer  and 
admirer  has  placed  his  finger  on  one  danger 
that  threatens  the  American  people  to-day, 
namely,  the  tendency  to  take  away  by  law  the 
freedom  of  action  of  the  individual  and  to 
232 


PUBLIC  OPINION  AND  BUSINESS 

attempt  to  shift  upon  numerous  and  often  half- 
digested  laws  burdens  that  the  individual  him- 
self should  cany,  and  to  try  to  solve  problems  by 
law  that  public  opinion  should  settle,  —  based 
on  a  few  of  the  great  fundamental  laws  of  life 
that  no  legislature  or  commission  can  change. 
M.  Leroy-Beaulieu  Is  right  in  declaring  that 
a  tireless  energy  characterizes  the  American 
people,  and  the  economic  progress  of  the 
country  has  been  so  rapid  as  to  astonish  foreign 
students  of  American  social  and  business  con- 
ditions. It  has  wrought  great  changes  in  our 
methods  of  business  and  of  living.  The  aver- 
age American  enjoys  luxuries  and  conveniences 
which  were  not  dreamed  of  twenty-five  years 
ago,  and  the  inventive  genius  of  Americans 
is  daily  placing  In  the  hands  of  ever>^  man 
new  and  improved  tools  with  which  to  do 
his  work.  Our  prosperity  has  Increased  the 
complications  of  government,  and  the  close 
attention  given  by  our  people  to  business  has 
resulted  in  less  personal  attention  to  public 
affairs,  about  which  there  is  not  the  feeling  of 
interest  and  responsibility  that  characterized 
233 


THE  TRUTH  ABOUT  THE  RAILROADS 

the  American  people  when  there  were  fewer 
people  and  less  wealth. 

The  average  American  must  realize  that 
with  a  more  complex  civilization  and  govern- 
ment the  duties  that  devolve  upon  him  indi- 
vidually are  more  important  than  before.  He 
must  take  a  broader  and  better  view.  He  must 
not  consider  the  law  a  crutch  to  take  the  place 
of  a  direct  and  personal  responsibility  that 
our  system  of  government  places  upon  him. 
He  should  realize  that  he  is  one  of  many  who 
make  government  in  this  country  and  deter- 
mine whether  it  shall  be  lax  or  efficient.  The 
law  is  only  the  expression  of  the  sound  public 
opinion  of  many  individuals. 

During  a  hundred  years  Americans  have 
taken  a  pride  in  the  extent  of  the  country,  in 
its  great  natural  wealth  and  resources,  in  its 
development,  and  in  the  large  machinery  of 
business  and  Industry  that  has  grown  up  un- 
der their  hands.  We  have  been  proud  that 
we  are  big;  so  much  so  that  we  have  exposed 
ourselves  sometimes  to  the  smiles  of  foreign- 
ers, who  have  thought  us  boastful. 
234 


PUBLIC  OPINION  AND  BUSINESS 

It  is  related  that  a  French  business  man 
accepted  the  invitation  of  a  prominent  man  of 
that  city  to  visit  Chicago.  The  two  started 
from  New  York  and  began  to  talk  about  the 
rapid  development  of  the  country,  and  the 
visitor  remarked:  "You  Americans  are  a 
boastful  people.  I  will  wager  a  sum  of  money 
that  before  we  have  been  in  Chicago  thirty, 
minutes,  at  least  two  of  your  fellow-citizens 
will  have  proven  it  to  me."  The  wager  was 
made.  Upon  alighting  from  the  train  the 
Chicago  man  met  a  friend  and  introduced  his 
guest.  Almost  in  a  breath  the  friend  saluted 
the  French  visitor,  and  urged  him  to  visit  the 
stockyards  at  once,  because  "they  are  the 
largest  in  the  world!"  Fifteen  minutes  later, 
at  a  club,  the  Frenchman  won  his  wager,  when 
a  prominent  merchant  invited  him  to  tour  the 
business  district  in  an  automobile  and  see  the 
"greatest  commercial  center  in  the  world!" 

Such  pride  is  natural  in  a  people  who  have 

done  great  things  in  a  short  period  of  years. 

Our  commerce  is  great,  and  our  trade  extends 

to  the  corners  of  the  earth, —  the  product  of 

235 


THE  TRUTH  ABOUT  THE  RAILROADS 

a  hundred  years.  Our  transportation  system, 
with  a  capitaHzation  which  is  the  lowest  in  any 
civiHzed  country  in  the  world,  with  the  lowest 
rates,  and  with  the  highest  efficiency  of  service 
and  ability  to  meet  the  demands  of  business,  is 
second  to  none.  An  elaborate  system  of  public 
education  has  been  built  up,  and  is  aided 
by  many  universities  and  schools  created  by 
private  gifts,  which  rank  with  the  best  insti- 
tutions of  learning  in  other  countries.  In  the 
common  things  of  life,  corresponding  progress 
has  been  made,  and  the  average  American 
lives  better,  profits  more  from  his  labor,  and 
has  greater  opportunities  of  advancement  than 
the  citizen  of  any  other  country. 

In  all  this  wonderful  progress,  there  is  one 
weakness  which  many  Americans  realize.  Our 
progress  has  been  largely  material,  and  public 
opinion  has  been  busy  with  purely  material 
things.  In  transportation,  business,  invention, 
and  the  spread  of  learning,  our  achievements 
are  equal  to  or  superior  to  those  in  foreign 
countries.  What  we  have  done  in  one  hundred 
years  is  due  largely  to  the  tireless  energy, 
236 


PUBLIC  OPINION  AND  BUSINESS 

individual  responsibility,  and  initiative  spoken 
of  by  M.  Lcroy-Beaulicu.  If  we  turn  to  our 
national  life,  the  welfare  of  which  is  dependent 
upon  the  degree  of  personal  responsibility  felt 
by  the  average  citizen,  a  less  favorable  result 
comes  to  our  attention.  There  are  defects  of 
political  and  governmental  machinery  which 
are  apparent  to  every  one.  Efforts  toward 
better  standards  are  made,  yet  there  are  still 
preserved,  in  the  methods  of  government  in 
most  of  the  cities  of  the  land,  customs  and 
practices  which  are  not  thorough,  efficient, 
and  economical,  or  equal  to  the  methods  in- 
sisted upon  in  ordinary  business.  In  private 
business  affairs  the  progress  toward  genuine 
efficiency  is  more  rapid  than  in  national, 
state,  or  municipal  government.  This  may  be 
attributed  to  the  lack  of  a  vigorous  public 
opinion  insisting  that  a  man  in  the  service  of 
the  public  shall  work  just  as  long  and  as  hard 
as  the  man  in  private  business. 

The  American  people  are  divided  in  their 
views  about  present  conditions.    The  ultra- 
conservative  are  content  to  watch  their  in- 
237 


THE  TRUTH  ABOUT  THE  RAILROADS 

come  grow  with  not  much  thought  of  public 
duty.  The  sentimentalists  and  the  radicals, 
actuated  more  by  the  heart  and  self-interest 
than  by  reason,  declare  that  all  things  are 
wrong  and  that  we  must  tear  down  and  begin 
over  again,  introducing  doubtful  principles 
and  ideas  often  obsolete  and  unpractical.  It  is 
probable  that  the  true  view  Is  between  these 
extremes,  —  that  there  is  sound  public  opinion 
in  this  country,  but  that  it  is  not  making  Itself 
felt  as  It  should,  because  the  pressure  of 
material  things  and  personal  interest  prevents 
proper  expression  of  it.  Society  as  a  whole 
needs  a  stronger  sense  of  personal  responsi- 
bility, creating  a  foundation  upon  which  a 
really  sensible  and  constructive  public  opinion 
may  be  built. 

Few  people  realize  the  number  of  men  in  this 
country  entitled  to  vote  who  fail  to  do  so.  In 
1900  there  were  In  the  United  States  21,329,- 
819  males  of  voting  age,  or  potential  voters; 
and  there  would  be  some  increase  each  suc- 
ceeding year,  and  yet  the  vote  for  President 
was  in  1896,  13,827,212;  In  1900,  13,970,134; 
2^8 


PUBLIC  OPINION  AND  BUSINESS 

in  1904,  13,524,349;  In  1908,  14,887,133;  or 
about  35  per  cent  not  voting.  This  is  certainly 
not  a  good  showing  of  interest.  PubHc  opinion 
should  arouse  people  to  take  more  interest  in 
selecting  the  men  who  are  to  make  and  ad- 
minister the  laws  that  affect  their  daily  lives  in 
many  directions. 

One  result  of  this  indifference  and  neglect  is 
that  there  is  a  class  described  generally  as 
"politicians,"  who  make  the  laws  —  and  make 
too  many  of  them.  That  is  their  business,  and 
the  more  elaborate  the  governmental  ma- 
chinery and  the  more  laws  to  be  made  and 
unmade,  the  better  for  the  "politician"  and 
his  friends,  who  are  living  at  the  expense  of  the 
rest  of  us  because  we  are  too  busy  to  express 
our  real  views  about  matters  of  grave  impor- 
tance. 

The  disposition  to  try  to  adjust  everything 
by  passing  laws  is  nowhere  more  strikingly 
shown  than  in  the  number  of  laws  introduced 
into  Congress.  While  the  largest  number  of 
proposed  enactments  submitted  to  any  Ameri- 
can Congress,  during  the  ten-year  period  end- 
239 


THE  TRUTH  ABOUT  THE  RAILROADS 

ing  in  1909,  was  at  the  Sixtieth  Congress, 
when  38,388  bills  were  introduced,  the  more 
deliberate  and  careful  methods  of  the  English 
are  shown  in  the  fact  that  the  largest  number 
of  bills  before  any  Parliament  in  that  period, 
that  of  1900,  was  only  621,  Less  than  2  per 
cent  of  the  bills  before  the  Sixtieth  Congress 
became  law,  while  67  per  cent  of  the  bills  pro- 
posed in  Parliament  in  1900  were  enacted. 
During  this  ten-year  period,  our  national  Sen- 
ate and  House  considered  146,471  different 
bills.  During  the  same  period  the  English 
Parliament  considered  but  6251  measures. 
The  congressional  "mill"  added  15,782  mea- 
sures to  the  law  of  the  land;  Parliament  en- 
acted but  3822  new  laws.  The  figures  in  both 
instances  include  both  public  and  private  bills, 
and  it  should  be  added  that  Parliament  con- 
siders and  acts  upon  many  subjects  which  are 
considered  by  state  and  municipal  bodies  in 
the  United  States. 

The  state  legislatures  for  191 1  considered, 
as  a  part  of  new  railroad  legislation  proposed, 
a  total  of  512  bills  affecting  the  physical  opera- 
240 


PUBLIC  OPINION  AND  BUSINESS 

tion  of  railroads.  These  proposed  bills  related 
to  hours  of  service,  terms  of  employment,  the 
kind  of  uniforms  to  be  worn  and  other  matters 
affecting  employees,  compulsory  and  volun- 
tary arbitration,  train  rules,  regulations  for 
the  operation  of  freight-  and  passenger-trains, 
equipment,  car-supply,  claims,  signals,  clear- 
ances, crossings,  maintenance  of  tracks,  and 
many  details  to  which  it  would  be  supposed 
that  the  long  experience  and  extensive  knowl- 
edge of  railroad  managers  under  the  varying 
conditions  of  business  would  be  a  better  guide 
than  the  judgment  of  a  legislative  body,  no 
matter  how  excellent  its  intentions. 

Legislation  that  is  a  response  to  a  real  public 
opinion  should  not  be  objected  to  by  any  con- 
scientious citizen.  Such  laws,  backed  by  the 
will  of  the  people,  will  be  enforced.  But 
the  deluge  of  new  laws  that  is  dumped  upon 
the  country  has  the  effect  of  weakening  respect 
for  the  law,  because  too  many  laws  prove 
unwise  in  practice,  and  are  not  enforced,  with 
the  result  that  too  many  people  grow  up  with 
a  lack  of  respect  for  law  and  order  and  do  not 
241 


THE  TRUTH  ABOUT  THE  RAILROADS 

obey  promptly  those  who  have  the  right  to  give 
orders. 

There  is  a  very  proper  concern  because  of 
railroad  accidents,  and  no  one  Is  more  con- 
cerned about  them  than  the  railway  owner  and 
manager:  they  have  the  greatest  Incentives 
to  avoid  them,  —  pride  In  their  profession, 
the  natural  desire  of  all  men  to  prevent  sorrow 
and  suffering  and  the  loss  of  money  and  repu- 
tation. And  yet  most  accidents  are  due  to 
three  fundamental  causes:  disobedience  by 
some  one  of  a  rule  that  If  followed  would  have 
prevented  the  accident;  negligence  of  some 
Individual  somewhere  in  doing  his  particular 
work,  making  the  car-wheel,  or  rail,  laying  the 
track,  inspecting  the  track,  throwing  the  signal, 
etc.;  recklessness  among  passengers  and  em- 
ployees. This  disobedience,  negligence,  and 
recklessness  cannot  be  eliminated  by  law,  but 
public  opinion  can  have  a  marked  effect  upon 
it. 

The  lack  of  public  opinion  of  sufficient 
weight  to  compel  the  enforcement  of  many  of 
the  laws  passed  in  the  United  States  is  one  of 
242 


PUBLIC  OPINION  AND  BUSINESS 

the  causes  of  our  homicides.  Every  day  of  the 
year  murders  are  committed  somewhere  in  the 
United  States.  Many  have  tried  to  point  out 
the  reason.  It  is  probable  that  several  factors 
rather  than  one  are  responsible,  and  that  they 
may  be  summed  up  in  the  laxity  of  public 
opinion  and  the  consequent  laxity  of  law  and 
its  administration.  For  this  death-roll  every 
individual  of  the  American  people  should  feel 
a  responsibility.  It  is  the  lack  of  such  public 
opinion  that  caused  the  Indiana  Railroad 
Commission  to  make  this  sad  comment  in 
its  accident  bulletin  issued  in  March,  1910: 
"Trespassers  continue  to  pay  the  usual  toll  in 
blood  for  the  fatal  right  to  make  thoroughfares 
of  the  railroads.  If  the  railroad  ties  were  three 
times  as  many,  and  were  saturated  with  oil 
and  burning  all  the  time;  if  dynamite  were 
placed  on  the  track  every  ten  feet,  and  people 
walked  on  the  tracks,  nevertheless  the  deaths 
would  be  no  more  certain  than  in  a  country 
whose  laws  do  not  prohibit  such  use  of  the 
tracks,  and  whose  customs  and  carelessness  of 
human  life  permit  these  astounding  fatalities." 
243 


THE  TRUTH  ABOUT  THE  RAILROADS 

From  1901  to  191 1,  50,708  persons  lost  their 
lives  by  "walking  on  the  railroad  tracks,"  — 
taking  chances  of  death  that  were  obvious. 
Add  54,183  more  who  were  injured,  and  you 
have  a  total  of  death  and  destruction  because 
the  American  people  have  not  developed  a 
public  opinion  upon  this  question  that  makes 
a  person  who  recklessly  takes  such  chances 
of  death  feel  the  opprobrium  of  his  associates. 
Three  pretty  Iowa  maids  walked  from  Bur- 
lington to  Chicago  last  autumn.  Interviewed 
by  a  Chicago  paper,  they  said:  "Last  Sunday 
we  must  have  walked  four  hours  on  the  road, 
though  without  seeing  a  soul.  So  we  got  back 
on  the  tracks,  walking  *  goose  fashion'  along 
the  cinder  path.  It  was  n't  long  before  trains 
were  going  by,  the  people  waving  their  hand- 
kerchiefs at  us.  That  was  great  fun."  A  rail- 
road statistician  posted  on  the  death-roll 
among  those  who  walk  the  tracks  "for  fun," 
adds  the  comment:  "What's  the  use  of  signals, 
colored  lights,  or  other  forms  of  warning!" 

The  accident-record  of  the  American  rail- 
roads has  often  been  made  a  weapon  in  the 
244 


PUBLIC  OPINION  AND   BUSINESS 

hands  of  their  critics,  but  the  press  and  the 
public  do  not  set  forth  clearly  the  true  facts. 
From  the  total  number  of  employees  killed 
and  injured  must  be  deducted  the  number  of 
casualties  due  to  their  own  recklessness,  care- 
lessness, or  willingness  to  take  chances,  of 
which  Mr.  William  J.  Cunningham  in  speak- 
ing in  February,  191 1,  before  the  New  Eng- 
land Railroad  Club  said:  "American  railway 
employees  are  proverbially  chance-takers,  and 
are  not  as  amenable  to  discipline  as  British 
railway  trainmen,  who  have  a  greater  respect 
for  authority  and  instructions.  Americans  are 
noted  for  always  being  impatient  and  in 
a  hurry.  These  national  differences  in  both 
passenger  and  employee  bear  a  relation  to  acci- 
dents, indefinite  to  be  sure,  but  nevertheless 
important,  particularly  in  the  *  chance-taking' 
by  employees." 

An  analysis  of  the  railroad  accidents  in  the 
United  States  for  the  year  ending  with  June, 
191 1,  shows  that  out  of  356  passengers  who 
were  killed,  there  were  only  96  persons  killed 
while  riding  on  trains  in  accidents  for  which 
245 


THE  TRUTH  ABOUT  THE  RAILROADS 

railroads  were  probably  responsible.  In  the 
same  year  the  railroads  handled  more  than 
900,000,000  passengers.  For  1909  the  results 
showed  that  a  passenger  could  travel  4000 
times  around  the  earth  without  being  killed, 
or  he  could  travel  60  miles  an  hour  for  220 
years  without  being  killed!  During  1908,  316 
railroad  companies  hauled  455,365,447  passen- 
gers without  the  death  of  a  single  passenger  In 
a  train  accident.  In  1909  there  were  347  rail- 
road companies,  hauling  a  total  of  570,617,563 
passengers,  without  a  single  accident  to  a 
passenger  in  a  train  accident.  These  figures 
cover  a  mileage  of  railway  equal  to  that  of  the 
United  Kingdom,  Germany,  and  France  com- 
bined, and  present  a  record  of  immunity  from 
fatalities  among  those  who  travel  unequaled 
except  in  the  United  States  in  previous  years. 
Incomplete  records  for  1910  show  that  156 
lost  their  lives  in  automobile  fatalities.  The 
death-roll  of  the  automobile  for  eleven  months 
of  191 1  was  257,  more  than  two  and  a  half 
times  the  death-roll  of  passengers  In  train 
accidents  for  which  railroads  were  responsible. 
246 


PUBLIC  OPINION  AND  BUSINESS 

One  hundred  persons  met  death  by  accident 
during  the  hunting-season  of  191 1,  in  the 
Northwestern  States. 

What  a  vigorous  public  opinion  might  do  in 
diminishing  the  railway  death  and  accident 
list  is  well  shown  in  the  remarkable  figures  of 
Fourth-of-July  accidents  which  have  recently 
become  public.  The  death-roll  from  the  cele- 
bration of  this  holiday  was  for  years  a  matter 
of  anxious  concern  to  many.  In  nine  years  it 
meant  39,219  killed  and  injured.  It  was  within 
recent  years  that  the  vigorous  agitation  for  a 
"safe  and  sane  Fourth"  started.  The  figures 
for  191 1  show  but  57  killed,  while  In  1910  the 
death-list  was  131  and  In  1909  It  was  215. 
Within  a  little  more  than  two  years'  time  a 
vigorous  public  opinion  intervened  between 
the  American  small  boy  and  a  time-honored 
method  of  celebrating  a  national  holiday, 
changed  the  customs  of  a  people,  and  reduced 
the  death-list  from  215  to  57. 

The  railway-owner  may  make  a  very  fine 
physical  machine,  but  when  It  Is  done  It  must 
be  operated  with  all  of  Its  complications  by 
247 


THE  TRUTH  ABOUT  THE  RAILROADS 

human  beings,  who  are  not  perfect,  and  who 
make  mistakes. 

In  our  country  of  large  distances  and  large 
cities,  the  question  of  feeding  people  and  keep- 
ing them  warm  means  that  transportation 
must  be  regular,  sufficient,  and  continuous. 
What  would  happen  to  New  York  or  Chicago 
or  Minneapolis  if  for  one  week  all  railroad 
transportation  were  abandoned.'' 

The  railway-owner  may  make  rules  and 
regulations  and  make  effort  to  continue  in 
business,  but  he  cannot  always  do  so  unless 
public  opinion  in  time  makes  it  clear  that  when 
a  man  chooses  as  his  means  of  livelihood  work 
on  a  railroad,  he  assumes  a  duty  to  society  as 
a  whole  to  give  absolute  obedience  to  rules, 
and  to  remain  at  work  until  suitable  arrange- 
ments are  made  to  relieve  him.  So  dependent 
is  the  welfare  of  the  whole  country  upon 
regular  transportation  that  in  time  public 
opinion  will  declare  that  men  on  a  railroad 
have  no  more  right  to  disobey  reasonable  rules 
than  have  the  men  in  the  army,  have  no  more 
right  to  leave  in  a  body  than  have  the  men  in 
248 


PUBLIC  OPINION  AND  BUSINESS 

the  army.  When  they  act  thus  in  the  army 
they  are  punished  for  mutiny  and  desertion. 
Probably  no  law  could  be  framed  at  the  present 
time  that  would  cover  these  ideas,  because  it 
is  contrary  to  our  American  ideas  to  say  that 
a  man  shall  or  shall  not  work  as  he  may  wish. 
But  public  opinion  would  in  time  crystallize 
so  that  in  some  way  strikes  or  industrial  war 
would  be  things  of  the  past,  and  men  could 
only  leave  in  a  body  by  being  mustered  out 
in  some  orderly  manner.  We  hear  much  about 
quasi-public  corporations,  and  public  opinion 
has  gone  a  long  way  in  taking  away  from  the 
owner  of  public-service  corporations  the  right 
to  manage  his  own  property,  to  name  his  own 
rates  or  prices,  to  decide  about  his  methods, 
and  has  imposed  on  him  the  responsibility  of 
providing  safe  and  adequate  public  service 
from  his  private  means,  but  so  far  has  exerted 
little  influence  upon  the  men  who  have  to 
make  the  quasi-public  corporation  of  use  to 
the  public.  If  a  man  decides  to  work  for  a 
quasi-public  corporation,  he  becomes  a  quasi- 
public  servant,  and  he  has  a  moral  duty  and 
249 


THE  TRUTH  ABOUT  THE  RAILROADS 

responsibility  to  society  just  as  much  as  the 
owner  has,  to  see  that  society  is  not  deprived 
of  the  service  necessary  for  its  existence. 

The  railroad  manager! Is  hampered  In  ob- 
taining absolute  precision  and  reliability,  not 
alone  by  the  human  equation,  but  by  the 
operation  of  the  force  M.  Leroy-Beaulieu 
points  out.  Over  many  of  the  employees  his 
authority  is  divided  with  the  labor  unions, 
which  exercise  a  powerful  influence  in  deter- 
mining the  extent  of  the  authority  he  is  to  be 
permitted  to  exercise  over  their  members.  To 
the  unions  he  must  look  for  acquiescence  not 
alone  in  the  rates  of  pay  and  terms  of  employ- 
ment, but  in  the  rules  he  makes,  the  authority 
he  exercises  over  men  charged  with  various 
duties,  and  the  obligations  under  which  a 
large  number  of  men  work.  His  power  to  cull 
his  forces  and  discard  not  only  the  unfit,  but 
those  who  do  not  demonstrate  their  entire 
capability,  is  limited. 

The  American  people  have  corrected  some 
of  the  errors  in  corporate  management  and 
realize  that  organized  capital  is  necessary  to 
250 


PUBLIC  OPINION  AND  BUSINESS 

the  welfare  of  the  country,  but  that  it  must 
be  controlled  and  regulated.  Organized  labor 
is  a  great  force  that  makes  for  good  or  evil 
of  labor  and  of  society  as  a  whole,  depending 
on  the  wisdom  and  patriotism  of  the  lead- 
ers. Most  men  want  to  work  and  support 
their  families,  but  they  fear  the  ridicule  of 
their  fellows  and  sometimes  follow  too  blindly 
an  unwise  leader  who  may  do  them  a  real 
harm. 

Public  opinion  at  one  time  justified  burning 
and  torturing  people  because  they  did  not 
follow  the  same  religious  practices  as  those  in 
authority.  In  old  Salem  it  justified  hanging 
women  who  were  thought  to  be  witches. 
Less  than  one  hundred  years  ago  it  justified 
one  man's  killing  another  in  a  duel  because  of 
some  insult,  real  or  fancied.  To-day  physical 
violence  and  social  ostracism  are  still  in  prac- 
tice toward  those  who  do  not  wish  to  join  a 
labor  organization  but  who  do  wish  to  work. 
But  public  opinion  will  change  and  say  to 
organized  labor,  as  It  has  said  to  organized 
capital,  "You  must  be  fair  to  all."  J.  B. 
251 


,  THE  TRUTH  ABOUT  THE  RAILROADS 

McNamara,  in  his  confession,  said,  "I  did 
what  I  did  for  principle."  It  is  only  necessary 
for  an  aroused  public  opinion  to  speak  out  and 
show  the  unfortunate  men  like  the  McNa- 
maras  that  the  many  good  men  in  the  ranks 
of  labor  and  the  many  good  men  in  the  other 
walks  of  life  will  not  stand  for  that  kind  of 
principle. 

The  transportation  business,  now  trying  to 
readjust  itself  physically  to  the  growing  needs 
of  a  great  country  which  has  developed  rap- 
idly, has  been  subjected  to  severe  attack  and 
criticism.  That  transportation  is  a  vital  part 
of  commerce,  and  the  greatest  element,  after 
agriculture,  in  business  success,  has  been 
ignored.  With  other  kinds  of  business  it  has 
felt  public  opprobrium,  because  an  element  of 
the  people  have  revolted  somewhat  against 
alleged  improprieties  of  the  past.  Railroads 
have  had  to  struggle  for  existence,  as  have 
other  forms  of  business.  Their  history  is  simi- 
lar to  the  history  of  other  forms  of  business 
of  contemporaneous  development,  and  their 
present  critics,  forgetting  all  that  has  been 
252 


PUBLIC  OPINION  AND  BUSINESS 

done  to  bring  the  American  railroad  to  its 
present  high  plane  of  efficiency,  have  been  led 
into  a  somewhat  unfair  attitude. 

Of  the  609,994  miles  of  road  in  the  world, 
which  is  the  mileage  as  of  1908,  nearly  40  per 
cent,  or  233,468  miles,  were  in  the  United 
States.  The  railroad-mileage  operated  has 
grown  from  159,272  in  1890,  to  239,652  in 
1910.  The  number  of  employees  of  railroads 
has  grown  from  750,017  in  1890  to  1,502,823  in 
1909,  and  there  are  at  least  1,000,000  holders 
of  securities.  These  2,500,000  owners  and 
employees  represent  about  10,000,000  of  our 
population,  and  their  rights  should  be  con- 
sidered and  protected  just  as  much  as  those  of 
other  classes  of  people. 

In  the  United  States  the  railroads  have  low- 
ered their  rates,  largely  by  voluntary  action, 
about  25  per  cent  since  1888,  but  the  tons  of 
freight  carried  have  increased  257  per  cent,  the 
mileage  of  freight-trains  80  per  cent,  and  the 
average  haul  per  ton  in  miles  14  per  cent. 
The  lowering  of  rates  saves  the  shipper  ^i  out 
of  every  $4.  he  formerly  paid,  and  on  the  ton- 
253 


THE  TRUTH  ABOUT  THE  RAILROADS 

nage  moved  by  the  railroads  in  19 lo  effected 
the  saving  of  ^615,928,000. 

As  compared  with  ^275,000  per  mile  in  the 
United  Kingdom,  $109,788  per  mile  in  Ger- 
many, $80,985  in  Russia,  $139,390  in  France, 
and  $112,879  ill  Austria,  the  capitalization  of 
the  railroads  in  the  United  States  is  smaller 
than  that  of  the  railroads  of  any  country  of  the 
first  class,  and  especially  low  when  considered 
from  the  standpoint  of  comparative  service 
to  business,  for  in  this  country  the  citizens 
command  the  service  of  five  miles  of  a  rail- 
way to  one  mile  that  serves  the  average  Eu- 
ropean. 

The  Railroad  Securities  Commission  says  in 
its  report  transmitted  by  the  President  to 
Congress,  December  11,  191 1:  — 

"Neither  the  rate  of  return  actually  re- 
ceived on  the  par  value  of  American  railroad 
bonds  and  stocks  to-day,  nor  the  security 
which  can  be  offered  for  additional  railroad 
investments  in  the  future,  will  make  it  easy 
to  raise  the  needed  amount  of  capital.  The 
rates  of  interest  and  dividends  to  outstand- 
254 


PUBLIC  OPINION  AND  BUSINESS 

ing  bonds  and  stocks  of  American  railroads  is 
not  quite  four  and  one  half  per  cent  in  each 
case." 

Public  opinion  must  be  exerted  to  see  that 
railroads  are  fairly  treated,  so  that  the  money 
needed  for  increased  and  improved  transporta- 
tion facilities  can  be  obtained  and  spent 
rapidly  and  freely. 

Every  age  has  its  problems,  and  we  some- 
times think  that  ours  are  different  from,  and 
much  more  difficult  than,  those  that  others 
have  had  to  deal  with.  I  read  the  following  the 
other  day;  "  The  merchants  form  great  com- 
panies and  become  wealthy,  but  many  of  them 
are  dishonest  and  cheat  one  another.  Hence 
the  directors  of  the  companies  who  have 
charge  of  the  accounts  are  nearly  always 
richer  than  their  associates.  Those  who  thus 
grow  rich  are  clever,  since  they  do  not  have 
the  reputation  of  being  thieves."  This  sounds 
familiar,  as  if  it  might  have  been  said  very 
recently,  but  it  was  published  in  the  Chronicle 
of  Augsburg,  Germany,  in  15 12,  four  hundred 
years  ago;  so  the  modern  reformer  who 
255 


THE  TRUTH  ABOUT  THE  RAILROADS 

thinks  business  is  all  wrong,  and  that  he  has 
discovered  the  trouble  and  can  remedy  it,  is 
somewhat  behind  the  times. 

The  following  also  came  to  my  notice:  "It  is 
impossible  to  limit  the  size  of  the  companies, 
for  that  would  limit  business  and  hurt  the 
common  welfare.  The  bigger  and  more  numer- 
ous they  are,  the  better  for  everybody.  If  a 
merchant  is  not  perfectly  free  to  do  business  in 
Germany  he  will  go  elsewhere,  to  Germany's 
loss.  Any  one  can  see  what  harm  and  evil  such 
an  action  would  mean  to  us.  If  a  merchant 
cannot  do  business  above  a  certain  amount, 
what  is  he  to  do  with  his  surplus  money?  It  is 
impossible  to  set  a  limit  to  business,  and  it 
would  be  well  to  let  the  merchant  alone  and 
put  no  restriction  on  his  ability  or  capital. 
Some  people  talk  of  limiting  the  earning  capac- 
ity of  investments.  This  would  be  unbearable 
and  would  work  great  injustice  and  harm  by 
taking  away  the  livelihood  of  widows,  orphans, 
and  other  sufferers,  noble  and  non-noble,  who 
derive  their  income  from  investments  in  these 
companies.  Many  merchants  out  of  love  and 

256 


PUBLIC   OPINION   AND   BUSINESS 

friendship  invest  the  money  of  their  friends  — 
men,  women,  and  children  —  who  know  noth- 
ing of  business,  in  order  to  provide  them  with 
an  assured  income.  Hence  any  one  can  see 
that  the  idea  that  the  merchant  companies 
undermine  the  pubHc  welfare  ought  to  be  seri- 
ously considered.  The  small  merchant  com- 
plains that  he  cannot  earn  as  much  as  the 
companies.  That  is  like  the  old  complaint  of 
the  common  laborer  that  he  earns  so  little 
wages.  All  this  is  true  enough,  but  are  the 
complaints  justifiable?"  This  is  from  a  report 
of  a  committee  appointed  by  the  Diet  of 
Nuremberg  to  investigate  monopolies,  and 
they  made  their  report  in  1522.  And  the  com- 
mittee found  then,  as  is  true  now,  that  they 
could  not  change  the  situation  very  much 
without  doing  more  harm  than  good! 

I  read  in  the  "Literary  Digest"  a  few  days 
ago  four  paragraphs  which  are  said  to  repre- 
sent the  Chinese  view  of  certain  business 
practices.  They  read  as  follows:  — 

"Those  who  deal  with  merchants  unfairly 
are  to  be  beheaded." 

257 


THE  TRUTH  ABOUT  THE  RAILROADS 

"Those  who  interrupt  commerce  are  to  be 
beheaded." 

"Those  who  attempt  to  close  the  markets 
are  to  be  beheaded." 

"Those  who  maintain  the  prosperity  of 
commerce  are  to  be  rewarded." 

The  Chinese  seem  to  recognize  that  injus- 
tice, interruption  of  business,  and  control  of 
markets  are  undesirable  things  and  that  the 
expansion  and  growth  of  commerce  is  a  good 
thing!  They  suggest  pretty  drastic  remedies, 
which  can  hardly  be  followed  out  in  this 
country;  and  they  suggest  rewarding  those 
who  expand  commerce,  while  in  this  country 
the  tendency  is  to  condemn  them. 

Public  opinion,  however,  in  this  country,  if 
created  wisely  by  the  action  of  the  true  ma- 
jority, can  accomplish  the  desired  results 
without  beheading  anybody.  Public  opinion 
can  insist:  — 

That,  in  the  schools  supported  by  the  pub- 
lic, children  shall  be  taught  the  great 
importance  of  absolute  obedience,  con- 
tinuous work,  accuracy,  and  economy, 
258. 


PUBLIC  OPINION  AND   BUSINESS 

and  that  these  habits  are  essential  for  any 
one  who  is  to  become  a  good  citizen ;  — 

That  the  press,  supported  by  the  subscrip- 
tions and  advertisements  of  the  pubHc, 
,  and  putting  forth  each  year  more  than 
io,cxx),ooo,ooo  copies,  can,  by  telling  the 
real  truth  in  simple  form,  do  much  good 
to  the  country  and  in  the  long  run  make 
more  money  than  by  being  sensational 
and  yellow;  — 

That  the  great  public-service  and  other  cor- 
porations must  be  fair  to  those  who  need 
their  service,  but  on  the  other  hand  they 
must  receive  fair  treatment  and  a  chance 
to  make  money,  or  they  will  not  be  ready 
to  serve  when  the  public  needs  them 
badly;  — 

That  the  honest,  hard-working  laboring 
man  must  be  allowed  to  work,  whether  his 
convictions  lead  him  to  belong  to  a  labor 
organization  or  not,  and  that  labor  organ- 
izations must  be  fair  and  square  in  their 
dealings  with  their  members  and  with  the 
public  at  large;  — 
259 


THE  TRUTH  ABOUT  THE  RAILROADS 

That  in  the  effort  to  correct  abuses  that  may- 
have  developed  in  business  Hfe  during  the 
very  rapid  and  really  marvelous  growth 
of  this  country,  the  tireless  energy  of  our 
people  should  not  be  destroyed  by  crip- 
pling   the    development    of    individual 
responsibility  and  initiative;  and  — 
.    That  laws  should  only  be  made  on  complete 
knowledge  of  the  real  facts. 
To  create  an  enlightened  public  opinion, 
every  one  must  contribute,  and  not  leave  the 
formation  of  that  opinion  to  a  small  minority 
who  make  a  great  deal  of  noise  but  are  not 
always  very  wise.   Every  one  can  do  a  little 
toward  helping  out. 
Maltbie  says :  — 

"  We  are  not  here  to  play,  to  dream,  to  drift; 
We  have  hard  work  to  do,  and  loads  to  lift. 
Shun  not  the  struggle;  face  it,  't  is  God's  gift." 

This  is  good  advice. 


THE  END 


CAMBRIDGE  .  MASSACHUSETTS 
U  .  S  .  A 


THE  CONFESSIONS  OF  A 
RAILROAD  SIGNALMAN 


By  J.  O.  FAGAN 


"  Extremely  well  written  and  forcible." —  The  Outlook. 

**  A  terrible  indictment  of  our  railway  management." 
—  New  York  Post. 

"  The  literature  of  the  day  contains  few  things  more 
interesting  than  these  confessions.  They  relate  to  rail- 
road accidents,  and  the  confessor  is  manifestly  a  man 
not  only  of  remarkable  discernment,  but  likewise  of 
rhetorical  skill."  —  Stone  and  Webster  Public  Service 
Journal. 

"Throws  much  light  on  the  frequency  of  railroad 
accidents  and  will  stimulate  serious  thought  on  the 
part  of  readers." —  Troy  Times. 

"Remarkable  and  interesting." — Boston  Herald. 

Illustrated  from  photographs,   i2mo,  ^i.oo  net. 

Postage  lo  cents. 


HOUGHTON  /^8^  BOSTON 

MIFFUN  /y'i^  ^^^ 

COMPANY  ^Isi)  NEW  YORK 


A  YEAR  IN  A  COAL-MINE 


By  JOSEPH  HUSBAND 


"  Mr.  Husband  enables  the  reader  to  carry 
away  a  vitalized  impression  of  a  coal-mine,  its 
working  and  its  workers,  and  a  grasp  of  vivid 
details."  —  San  Francisco  Chronicle. 

"  It  is  a  story  of  vivid  and  compelling  interest 
and  every  word  bears  the  impress  of  truth."  — 
Living  Age, 

"  Apart  from  its  informative  value,  this  is  a 
book  that  no  one  can  fail  to  enjoy."  —  Phila* 
delphia  Press. 

"  A  refreshingly  frank  narrative."  —  New 
York  Su7u 

With  frontispiece,     ^i.io  net.     Postage  9  cents. 


HOUGHTON  /^S^  BOSTON 

MIFFLIN  /^S^  AND 

COMPANY  rara  NEW  YORK 


(,V 


3s^^ 


^' 


IJUlTl 


University  of  California  Library 
Los  Angeles 

This  book  is  DUE  on  the  last  date  stamped  below. 


/  ^  ^  gt^      ftTI.  "^   C&  O 


^ 


^ 


^^^ 


^ 


o 


^'^ 

^/^a; 


f//>     ^^0 


o 

I? 


:<^ 


%a 


fQ^ 


;ii^ 


m 
33 


'^Aflvoairr 


Aavaaira^ 


jujnv'iur 


A^EUNIVERS/^ 


o 


^10SANCE% 

o 


c^ 


"^AaaAiNrt-aw^^ 


3  1158  01314  6633 


^mi\m-i^ 


MEUNIVERJ/A 


^lOSANCElfj^ 

o 


^OfCAllFO/,:  FCAIIFO/?^ 

UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


\^my\^'^ 


'^.'/ojnv>jo>^ 


'%fl3AINn]W> 


.OF-CALIFOftfe 


^.OFCAUFO/?^ 


■i?AavaaiiT 


^'?Aavaan# 


g^ 


^^rtEUNIVERy/Zi 


^  ^.'-Ni**^ 


..y^ 


i 

—PI 

o 


'^/saaAiNiiJi\> 


\\^EUNIVER%       ^^lOSANGElfj> 


^;^IUBRARYQ^ 

§  1  ir"^ 


filiONYSOV'^"^        %a3AINn-3WV^         '^<^0JITV3JO^ 


m 

4r> 


A^tllBRARYQ^ 


.\^EUNIVER5'/A 


v^lOSANCElfj-^ 


■'!y7fu3Aiun.iviV.' 


.;^OFCALIFO/?,fc, 


^       «>5 


■XAinx/wana"^ 


AOfCAllFO% 


^, 


